Making Work Pay Credit for 2009 and 2010

This year the stimulus payment is different! You won't receive an extra payment with your tax return. Since April 2009 you have been receiving a little more money in each paycheck. This is called the Making Work Pay Credit.

The Making Work Pay Credit is worth up to $400 for an individual and $800 for a married couple. In order to quickly provide this credit, you have been receiving the $400 (or $800 if married) spread out as part of your paychecks between April and December, 2009. You will receive the Making Work Pay Credit again in 2010 spread out as part of your paychecks between January and December.

Be careful if you:

• Have more than one job
• Are married and you and your spouse both work
• Are a retiree with a pension and no wage income
• Can be claimed as someone else's dependent
• Do not have a valid Social Security number
• Receive Social Security, SSI, Railroad Retirement, or Veteran's Disability Payments

If you fall into one of the categories above, you may be getting more Making Work Pay Credit than you are entitled to. As a result, when filing your tax return, you may end up with a reduced refund or even owing taxes.

To avoid owing taxes:

• Contact your Payroll or Human Resources Department to obtain your W-4 Form to increase your tax withholding amount.
• For additional questions, please consult with your tax preparer.

New Education Tax Credit

• The American Opportunity Tax Credit replaces the Hope Credit for education after high school.
• Maximum credit is $2,500.
• The credit is partially refundable, so families who do not owe taxes could receive some of this new credit as a refund.
• The credit can be used for up to four years of education after high school and will cover expenses for books and materials in addition to tuition.

First Time Homebuyer Credit

If you buy a home for the first time (or buy a home after not owning one in the past 3 years) between January 1st and December 1st, 2009, you may qualify for a tax credit of up to $8,000. This is a one-time refundable credit or payment that you will not have to be pay back.

Unemployment

The first $2,400 of unemployment benefits will not be counted as taxable income in 2009.

Energy-Savings Credit

A credit of up to 30% of the expenses for the cost of energy-saving home improvements done in 2009 and 2010, such as new windows, outside doors, water heaters and central air conditioners. The maximum credit allowable is $1,500.

For more information on new tax credits for 2009-10 please go to www.irs.gov.

Previous Page | Free tax campaign | Next Page

United Way of King County Free Tax Preparation partners and sponsors: