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What is the Making Work Pay Tax Credit? 

The Making Work Pay Tax Credit increased the paychecks of millions of workers in 2009 and 2010, but unfortunately, this tax credit has expired. There is no Making Work Pay Credit for tax years after 2010. The following information may be of use if you are preparing an amended return for 2009 or 2010.

The Making Work Pay Credit is worth 6.2% of earned income, for a maximum of $400 for a single filer or a maximum of $800 for a married couple filing jointly. The credit is refundable, so even taxpayers who owe no tax are eligible for the credit. The credit should have automatically appeared in your paycheck, but you will need to claim the credit on your 2010 Tax Return. If you have not received the full amount of the credit to which you are entitled through paycheck withholdings then you should be refunded the remaining amount. The credit is calculated on Form 1040 (Schedule M, Making Work Pay Credit).

The credit is phased out for higher-income earners. Married couples with an adjusted gross income above $150,000 or other taxpayers with an adjusted gross income above $75,000 can expect to see little or no change in their take-home pay. These taxpayers, and those holding multiple jobs, may choose to submit a new Form W-4 to their employer(s) to ensure that enough taxes are being withheld.

Making Work Pay Credit CAUTION:

  • If you are a single taxpayer with two jobs, you may be receiving the full amount of the credit in both paychecks (for a total of $800). In this case, you will have to repay the IRS $400 on your 2010 Tax Return.
  • If you are married filing jointly and in a household where both spouses work full-time jobs, the new withholding tables may give each spouse up to $600 over time (for a total of $1,200). In this situation, you will also have to repay $400.
  • If you are a single student with a part-time job you may receive $400, but if you are claimed as a dependent on a parent's tax return you will have to repay the $400.
  • Social Security recipients, many veterans, and railroad retirees were granted an Economic Recovery Payment of $250 under the stimulus plan, but those employed seniors who also received the Making Work Pay Credit in their paychecks will have to repay the $250.

What is the Making Work Pay Credit in 2010? 

The Making Work Pay Credit was distributed over the course of 9 months in 2009 but it was spread out over all 12 months of 2010. Because of this, their might have been a slight decrease in your 2010 paychecks from what they were in 2009. 

What is the Government Retiree Credit? 

The Government Retiree Credit that was available in 2009 has expired and is not available for Tax Year 2010 and beyond.

If you are amending your 2009 Tax Return, you may need to know if you received the credit:

How Do I Know if I Received the $250 Economic Recovery Payment?

If you are not receiving Social Security benefits, Veterans' benefits, or Railroad Retirement benefits, then you most likely did not receive the $250 stimulus payment.

If you are not sure whether you received the payment, there are two easy ways to check:

Option 1: Call the Social Security Administration at 1-800-772-1213

Option 2: Call the Internal Revenue Service at 1-800-829-1040

Where Can I Find More Information on Paycheck Withholding? 

Find out how to bring home more money and reduce your paycheck tax withholding.

Are There Other Tax Credits or Deductions I Can Claim?

See what other tax credits and tax deductions you may qualify to claim on your tax return.