Making Work Pay tax credit
Encyclopedia
The Making Work Pay Tax Credit was a tax credit
allowed by the Internal Revenue Service
of the United States
. It was authorized in the American Recovery and Reinvestment Act of 2009
.
The credit was given at a rate of 6.2 percent of earned income up to a maximum of $400 for individuals or $800 for married taxpayers. Typically employers reduced withholding to provide an increase in take-home pay without any effort required from taxpayers. If the taxpayer had multiple jobs or was self-employed, they needed to adjust withholding.
The credit expired at the end of Tax Year 2010; it was only in effect for tax years 2009 and 2010, and will not be available for 2011.
Tax credit
A tax credit is a sum deducted from the total amount a taxpayer owes to the state. A tax credit may be granted for various types of taxes, such as an income tax, property tax, or VAT. It may be granted in recognition of taxes already paid, as a subsidy, or to encourage investment or other behaviors...
allowed by the Internal Revenue Service
Internal Revenue Service
The Internal Revenue Service is the revenue service of the United States federal government. The agency is a bureau of the Department of the Treasury, and is under the immediate direction of the Commissioner of Internal Revenue...
of the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
. It was authorized in the American Recovery and Reinvestment Act of 2009
American Recovery and Reinvestment Act of 2009
The American Recovery and Reinvestment Act of 2009, abbreviated ARRA and commonly referred to as the Stimulus or The Recovery Act, is an economic stimulus package enacted by the 111th United States Congress in February 2009 and signed into law on February 17, 2009, by President Barack Obama.To...
.
The credit was given at a rate of 6.2 percent of earned income up to a maximum of $400 for individuals or $800 for married taxpayers. Typically employers reduced withholding to provide an increase in take-home pay without any effort required from taxpayers. If the taxpayer had multiple jobs or was self-employed, they needed to adjust withholding.
The credit expired at the end of Tax Year 2010; it was only in effect for tax years 2009 and 2010, and will not be available for 2011.