Notice there was no such credit in 2008.
This came off of a tax return prepared in Tax Act – the program provides a nifty side my side comparison of Prior year and Current year (if you did both in their program of course). You received this Tax Credit depending on how much your taxable income ended up being. Mine was higher than this one so I only received $110. Still, it’s a direct CREDIT to your tax amount due. As if you already paid it. So that means if your return showed that you wed $300, with this credit, you now get a $100 REFUND. Even if you already qualified for a refund as the return above did – then $400 was added to that refund amount.
Credit Phased-Out Based on Income
The Making Work Pay credit starts to be reduced for individual filers making $75,000 in modified adjusted gross income, or $150,000 for joint filers. The credit is reduced by 2% of the amount of income in excess of the $75,000 (or $150,000) threshold. The credit is completely phased out for individuals making $95,000 or more, or $190,000 for joint filers.
Earned Income Required for the Credit
Individuals with earned income are eligible for the Making Work Pay credit. Earned income for the Making Work Pay credit means income from wages and self-employment.
This tax credit is only available in 2009 & 2010, but as you can see with those income qualifications, it is going to help out a LOT of people!
Of the 5 tax returns I am doing, three of us are employed, 1 is retired & 1 has been unemployed but has rental income. The last one didn’t get this credit since he had no true “earned income” (rental lost money on his return). The retired person will get a $250 credit that all SS recipients receive in lieu of the Making Work Pay Credit. Of the 3 of us who are employed, 2 received the full $400 and I had the reduced amount due to my higher taxable income. But I still got some!
Since tax rates remained the same on everyone this year – there’s has been talk or raising rates on the wealthy, but that HAS NOT HAPPENED YET – don’t you view this as a tax cut? I know I do.