From the IRS website:
In 2009 and 2010, the Making Work Pay provision of the American Recovery and Reinvestment Act will provide a refundable tax credit of up to $400 for working individuals and up to $800 for married taxpayers filing joint returns.
This tax credit will be calculated at a rate of 6.2 percent of earned income and will phase out for taxpayers with modified adjusted gross income in excess of $75,000, or $150,000 for married couples filing jointly.
For people who receive a paycheck and are subject to withholding, the credit will typically be handled by their employers through automated withholding changes in early spring. These changes may result in an increase in take-home pay. The amount of the credit will be computed on the employee’s 2009 income tax return filed in 2010. Taxpayers who do not have taxes withheld by an employer during the year can also claim the credit on their 2009 tax return.
http://www.irs.ustreas.gov/newsroom/article/0,,id=204447,00.html
Note the language. It is a credit of 6.2% for earners up to $75K/$150K. So for folks making, say, $40K, they will receive a $240, or $20 per month, tax credit for 2009. Obama touts 400/800. Think a few people are going to end up feeling ripped off by this Obama promise come payoff time next year?
I would have thought just sending a check would have done more to stimulate the economy NOW, but I’ll admit I’ve been playing around with my withholding ever since I filed my taxes, so I wouldn’t have noticed if my employer changed it as well.
6.2%, up to $800, is a gross income of $12,903. I would think that most people who work will have made that much in 2009, so they would see the full $800. Unless I’m not understanding the concept.
If you made $40,000, 6% of $40,000 is $2400, not $240, so I presume they just capped it at $400/800, and most people will see the credit. Unless you make too much money ($75,000 a year if you are filing separately), at which point I guess the meager credit amount will be taken away from you.