what do u mean “an adjustment in the withholding tables”? are the taxes less or more? I keep reading that the average tax payer is getting a tax break of approx. 13 dollars a week.
please back up your statement with an example.
Yes, that’s all it seems to be. I got a note from employer saying that I should look at the amount they withheld and that it would be less and that I should know it, since it might result in having to pay the difference at the end of the year. When I looked at the change in the withholding, I found that it was actually MORE than before. All it all, it’s all a make-work facade. Presumably, when the withholding is less, it would put another hundred dollars in one’s pocket that he’s have to pay back later. Since anyone can decide at any time how much to withhold, they whole thing seems truly ridiculous as an economic “stimulus” move. Anyone employed who has withholding is already smart enough to know this.
There was no change down in tax rates.
However, there were several tax credits in the porkulus bill (text is here); based on one of these credits, the "Making Work Pay" tax credit, the Treasury has been directed to make a change to the tax withholding tables for the two years the credit is in effect, even though generally such withholding changes in the past have been based on rate changes, not on tax credits.
Here's the final text of the "Making Work Pay" tax credit:
SEC. 1001. MAKING WORK PAY CREDIT. (a) In General.--Subpart C of part IV of subchapter A of chapter 1 is amended by inserting after section 36 the following new section: ``SEC. 36A. MAKING WORK PAY CREDIT. ``(a) Allowance of Credit.--In the case of an eligible individual, there shall be allowed as a credit against the tax imposed [[Page 123 STAT. 310]] by this subtitle for the taxable year an amount equal to the lesser of-- ``(1) 6.2 percent of earned income of the taxpayer, or ``(2) $400 ($800 in the case of a joint return). ``(b) Limitation Based on Modified Adjusted Gross Income.-- ``(1) In general.--The amount allowable as a credit under subsection (a) (determined without regard to this paragraph and subsection (c)) for the taxable year shall be reduced (but not below zero) by 2 percent of so much of the taxpayer's modified adjusted gross income as exceeds $75,000 ($150,000 in the case of a joint return). ``(2) Modified adjusted gross income.--For purposes of subparagraph (A), the term `modified adjusted gross income' means the adjusted gross income of the taxpayer for the taxable year increased by any amount excluded from gross income under section 911, 931, or 933. ``(c) Reduction for Certain Other Payments.--The credit allowed under subsection (a) for any taxable year shall be reduced by the amount of any payments received by the taxpayer during such taxable year under section 2201, and any credit allowed to the taxpayer under section 2202, of the American Recovery and Reinvestment Tax Act of 2009. ``(d) Definitions and Special Rules.--For purposes of this section-- ``(1) Eligible individual.-- ``(A) In general.--The term `eligible individual' means any individual other than-- ``(i) any nonresident alien individual, ``(ii) any individual with respect to whom a deduction under section 151 is allowable to another taxpayer for a taxable year beginning in the calendar year in which the individual's taxable year begins, and ``(iii) an estate or trust. ``(B) Identification number requirement.--Such term shall not include any individual who does not include on the return of tax for the taxable year-- ``(i) such individual's social security account number, and ``(ii) in the case of a joint return, the social security account number of one of the taxpayers on such return. For purposes of the preceding sentence, the social security account number shall not include a TIN issued by the Internal Revenue Service. ``(2) Earned income.--The term `earned income' has the meaning given such term by section 32(c)(2), except that such term shall not include net earnings from self-employment which are not taken into account in computing taxable income. For purposes of the preceding sentence, any amount excluded from gross income by reason of section 112 shall be treated as earned income which is taken into account in computing taxable income for the taxable year. ``(e) Termination.--This section shall not apply to taxable years beginning after December 31, 2010.''. (b) Treatment <> of Possessions.-- (1) Payments to possessions.-- [[Page 123 STAT. 311]] (A) Mirror code possession.--The <> Secretary of the Treasury shall pay to each possession of the United States with a mirror code tax system amounts equal to the loss to that possession by reason of the amendments made by this section with respect to taxable years beginning in 2009 and 2010. Such amounts shall be determined by the Secretary of the Treasury based on information provided by the government of the respective possession. (B) Other possessions.--The <> Secretary of the Treasury shall pay to each possession of the United States which does not have a mirror code tax system amounts estimated by the Secretary of the Treasury as being equal to the aggregate benefits that would have been provided to residents of such possession by reason of the amendments made by this section for taxable years beginning in 2009 and 2010 if a mirror code tax system had been in effect in such possession. The preceding sentence shall not apply with respect to any possession of the United States unless such possession has a plan, which has been approved by the Secretary of the Treasury, under which such possession will promptly distribute such payments to the residents of such possession. (2) Coordination with credit allowed against united states income taxes.--No credit shall be allowed against United States income taxes for any taxable year under section 36A of the Internal Revenue Code of 1986 (as added by this section) to any person-- (A) to whom a credit is allowed against taxes imposed by the possession by reason of the amendments made by this section for such taxable year, or (B) who is eligible for a payment under a plan described in paragraph (1)(B) with respect to such taxable year. (3) Definitions and special rules.-- (A) Possession of the united states.--For purposes of this subsection, the term ``possession of the United States'' includes the Commonwealth of Puerto Rico and the Commonwealth of the Northern Mariana Islands. (B) Mirror code tax system.--For purposes of this subsection, the term ``mirror code tax system'' means, with respect to any possession of the United States, the income tax system of such possession if the income tax liability of the residents of such possession under such system is determined by reference to the income tax laws of the United States as if such possession were the United States. (C) Treatment of payments.--For purposes of section 1324(b)(2) of title 31, United States Code, the payments under this subsection shall be treated in the same manner as a refund due from the credit allowed under section 36A of the Internal Revenue Code of 1986 (as added by this section). (c) Refunds <> Disregarded in the Administration of Federal Programs and Federally Assisted Programs.--Any credit or refund allowed or made to any individual by reason of section 36A of the Internal Revenue Code of 1986 (as added by this section) or by reason of subsection (b) of this section shall not be taken into account as income and shall not be taken into account as resources for the month of receipt and the following 2 months, [[Page 123 STAT. 312]] for purposes of determining the eligibility of such individual or any other individual for benefits or assistance, or the amount or extent of benefits or assistance, under any Federal program or under any State or local program financed in whole or in part with Federal funds. (d) Authority Relating to Clerical Errors.--Section 6213(g)(2) is <> amended by striking ``and'' at the end of subparagraph (L)(ii), by striking the period at the end of subparagraph (M) and inserting ``, and'', and by adding at the end the following new subparagraph: ``(N) an omission of the reduction required under section 36A(c) with respect to the credit allowed under section 36A or an omission of the correct social security account number required under section 36A(d)(1)(B).''. (e) Conforming Amendments.-- (1) Section 6211(b)(4)(A) is amended by inserting ``36A,'' after ``36,''. (2) Section 1324(b)(2) of title 31, United States Code, is amended by inserting ``36A,'' after ``36,''. (3) The table of sections for subpart C of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 36 the following new item: ``Sec. 36A. Making work pay credit.''. (f) Effective <> Date.--This section, and the amendments made by this section, shall apply to taxable years beginning after December 31, 2008.
Boiled down, this tax credit comes to $400 for single filers and $800 for joint filers, assuming that they have more than $6,450 dollars or $12,900 of earned income respectively. This tax credit is only available for years 2009 and 2010.
There are two tables. They withholding table is what is taken out of your check accoding to what you put down on your W-4 form. example married, 1 dependent. With this info they take a set amount out of your check. The other table is the tax table. This table tells you how much you are taxed and at what percentage. example 10%, 15% etc. The big O adjusted the “WITHHOLDING TABLE”. The tax table did not change at all. you still how the 10%, 15% etc according to what you earn. Bottom line, you did not get a tax cut, all they are doing is withholding less.