President Obama signed into law the American Recovery and Reinvestment Act of 2009 this week. One of the provisions of the ARRA is the Making Work Pay tax credit.
For 2009 and 2010, the credit will provide a refundable tax credit of up to $400 for individuals and up to $800 for married couples filing joint tax returns. The tax credit is calculated at 6.2% of earned income and will phase out for taxpayers who earn over $75,000 for singles and $150,000 for married couples who file a joint return.
What do you have to do?
Absolutely nothing. Your employer will make the changes automatically based on the new withholding tables sent out by the Internal Revenue Service.
When will the increase happen?
The IRS is asking that employers use the new withholding tables no later than April 1, 2009. The increase in your paycheck should come shortly after.
What should you do with the increase?
No matter the amount of the increase, it should be put to good use.
Two good uses that immediately come to mind are:
- Paying off debt
- Boost your savings account
I think it's important to realize this is happening because if you don't, the extra money will just leave your checking account as quickly as it comes in. By tracking down the extra money and saving it or applying it towards debt payments, you can really make it pay.
i'm all about padding the budget a bit, but i'm still nervous at this massive amount of money we're doling out! yikes.
I live in California and am considered "high income" and thus will not receive this credit. It is so expensive to live here that my "high income" allows me to live the same lifestyle that a person almost anywhere else would live making less than half of what I make. (Before someone tells me to move away: I grew up here and my entire family lives here. It wasn't like this when I was a child) But I will see my taxes go up to pay for everyone else's handout. I already rent out my second bedroom to help with finances. Maybe I could rent out my room and go live in the basement of my own house so I can afford the new taxes that are inevitable to pay for all this welfare.
It is important to realize this is happening. Another current economic event I've been researching is with the bank. Lately some pay higher percentage rewards on checking accounts, a lot of my friends use it and have loved it. I found this tool helpful for me on CheckingFinder.com They have a list of banks offering up to 6% in reward checking accounts just to use the debit card, online banking, or use direct deposit.
I’ll pass it on even though its kind of long :)
Bank Rates:
First Robinson Savings Bank - Robinson, IL
6.01
Southern Missouri Bank & Trust
6.01
Bank of Ripley - Ripley, TN
5.26
Communication Federal Credit Union - OK
5.25
LA DOTD Federal Credit Union - Denham Spring, LA
5.25
Keystone Bank - Auburn, AL
5.15
Connexus Credit Union - Wausau, WI
5.15
Altra Federal Credit Union
5.05
Farmers and Merchants - Nashville, IL
5.05
Community State Bank - Poteau, OK
5.05
First State Bank - Kansas City, KS
5.03
State Employees Credit Union - Santa Fe, NM
5.02
Grand Bank of Texas - Grand Prairie, TX
5.02
Harbor Credit Union - Green Bay, WI
5.01
Malvern Federal Savings Bank - Paoli, PA
5.01
Union State Bank - Everest, KS
5.01
United National Bank - Cairo, GA
5.01
First Banking Center - Lake Geneva, WI
5.01
Noble Bank & Trust - Anniston, AL
5.01
The Community Bank - Brockton, MA
5.01
Bank of Little Rock - Little Rock, AR
5.01
Community Bank of Pleasant Hill - Pleasant Hill, MO
5.01
Community Bank of Raymore - Raymore, MO
5.01
Olmsted National Bank - Rochester, MN
5.01
Royal Banks of Missouri - St. Louis, MO
4.78
Texas Citizens Bank - Pasadena, TX
4.76
Courtesy of BancVue.
Enjoy, And thanks again for the information! ~Azahar