GMA this morning

[taxmom34]

had tips from the tax lady (i forgot her name), but , i'm not sure if i understand how she explained the making work pay credit. her explanation was that if your employer did not change the withholding you can get the credit when you file your tax return. every one of my clients that worked got a boost in their paychecks in may and they got the credit when their taxes were done. the way, i 've been looking at it they got a benefit all year and another benefit when they did their tax returns. How can you tell if employer used the new tables or not? did i misunderstand her explanation and am i correct in the way i interpret the credit.?

[taxxcpa]

Credit

had tips from the tax lady (i forgot her name), but , i'm not sure if i understand how she explained the making work pay credit. her explanation was that if your employer did not change the withholding you can get the credit when you file your tax return. every one of my clients that worked got a boost in their paychecks in may and they got the credit when their taxes were done. the way, i 've been looking at it they got a benefit all year and another benefit when they did their tax returns. How can you tell if employer used the new tables or not? did i misunderstand her explanation and am i correct in the way i interpret the credit.?

The income tax withholding rates were reduced, but the tax rate was NOT reduced. So, theoretically, you would have $ 250 too little withheld, so the credit would be a way of achieving the equivalent of having reduced the tax rate.

In practice, due to phase-outs and other gimmicks, some people got the $ 250 that had no underwithholding and other had underwithholding and did not get the credit.

[thomtax]

The income tax withholding rates were reduced, but the tax rate was NOT reduced. So, theoretically, you would have $ 250 too little withheld, so the credit would be a way of achieving the equivalent of having reduced the tax rate.

In practice, due to phase-outs and other gimmicks, some people got the $ 250 that had no underwithholding and other had underwithholding and did not get the credit.

I believe you mean $400. The $250 was the ss recipients.

LT

[ChEAr$]

IOW supermom, you are understanding completely. The credit appears in the section for payments regardless of how much or how little withholding was.

Poor choice of words for the taxlady on GMA.

[Peachie]

I use this explanation taxxcpa

The income tax withholding rates were reduced, but the tax rate was NOT reduced. So, theoretically, you would have $ 250 too little withheld, so the credit would be a way of achieving the equivalent of having reduced the tax rate.

In practice, due to phase-outs and other gimmicks, some people got the $ 250 that had no underwithholding and other had underwithholding and did not get the credit.

except I tell them it's $400/$800. I can certainly see the difference in many of my clients returns. I warned them of this last year though and asked them to adjust accordingly. Only a few listened.

Peachie

[taxxcpa]

I agree

I believe you mean $400. The $250 was the ss recipients.

LT

I got so used to entering the $ 250 for SS recipients that I overlooked that the basic credit was $ 400.

[Bonnie]

Well, hopefully everyone learned their lesson this year cause the same thing will happen next year, it's a two year deal, 2009-2010. so next year Making Work Pay Credit again. If they still haven't dealt with it, same scenerio next year.

[ChEAr$]

Well, hopefully everyone learned their lesson this year cause the same thing will happen next year, it's a two year deal, 2009-2010. so next year Making Work Pay Credit again. If they still haven't dealt with it, same scenerio next year.

Yes, same for 2010, however HOPEFULLY there won't be any $250 stimulus payments to deal with.