Contractor Tax Credits, Making Work Pay Credit
The IRS released withholding tables that will directly impact the Making Work Pay Credit that was enacted in the American Recovery and Reinvestment Act. The result, workers will take home millions more in pay in 2009.
This is a much needed bonus for the struggling home building industry and its workers. This new Act was not part of the Stimulus Bill of 2009 under the Obama administration recently passed. The Recovery Act added section 1001(a) allows for 6.2% of an individuals earned income or $400 ($800 if joint) to be taken.
It also has some other definitions for earned income tax credits with two modifications on self employment and gross income that need to be looked at. As long as youre a nonresident alien, non dependent in 2008 and not an estate or trust you may qualify.
If you have an adjusted gross income of $95,000 ($190,000 with a return filed jointly) the credit will completely phase out and you will not be eligible (remember AIG not Net). Also, they dont allow for any government payments under the VA, Social Security and other federal government payouts in the tax year.
The new Wage and Withholding and Advance Earn Income Credit Payment Tables have been mailed to over 9 million employers. If you work for yourself you may not have received one or even known of the new credit.
The tax laws are always changing, most of us cannot keep up with every new Stimulus or Non-Stimulus law that is passed. Most self employed individuals pay quarterly, but many do not. This year take a close look at this and other new laws and tax codes for every dollar you can save.
To learn more about the Making Work Pay Credit, visit TurboTax Online. They have the latest information to help you save money on taxes.
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