60http://blog.dalbergandassociates.comSun, 27 May 2012 21:38:20 GMTSun, 27 May 2012 21:38:20 GMTen info@dalbergandassociates.comnohttp://blog.dalbergandassociates.com/2009/05/05/making-work-pay--pitfalls-related-to-the-new-tax-credit.aspx?ref=rssTony ClarkThe "Making Work Pay" tax credit may have some individuals scratching their heads and reaching into their wallets.<BR><BR>The idea is simple, give peope who work some extra money this year in the form of a tax credit.&nbsp; The pitfall lies in the delivery method.&nbsp; The federal government chose to deliver this tax credit in the form of a rebate given to taxpayers by adjusting down their required withholding.<BR><BR>What they did not factor in initially was that some taxpayers either have multiple jobs, or are married individuals that have disproportionate incomes that could create problems come tax time next year.<BR><BR>For example, if you are a single individual working two jobs this year and earning&nbsp;$10,000 at each job, you are eligible for the full $400 credit.&nbsp; Both of your employers, using the updated withholding tables, may decrease your withholdings by $400 thereby reducing your withholdings by a total of $800.&nbsp; Now you may be under-withheld for 2009 by $400!&nbsp; This could mean a much smaller refund, or even additional tax due come next April 15th.<BR><BR>Now let's assume you and your spouse both work.&nbsp; If you make $50,000 and your spouse makes $150,000 and you file Married Filing Joint (MFJ), you would not qualify for the credit.&nbsp; (Recall that individuals who make over $95,000 and MFJ filers who make over $190,000 are not eligible for the credit.)&nbsp; Your employer may reduce your withholdings using the updated tax tables and next April 15th you may find that you have been under-withheld.<BR><BR>if you think you may be caught by these changes, you can file a new W-4 with your employer.&nbsp; When filling out the new W-4 you will be looking to increase your withholdings.&nbsp; You can increase the amount withheld from your paycheck by claiming fewer exemptions, or by having additional amounts be withheld each week.<BR><BR>Not sure how to proceed... contact your tax professional.<BR>Tax PlanningIncome Taxhttp://blog.dalbergandassociates.com/2009/05/05/making-work-pay--pitfalls-related-to-the-new-tax-credit.aspx#Comments01f4a287-aca3-48f4-8964-f35de56cbcfdTue, 05 May 2009 14:59:00 GMThttp://blog.dalbergandassociates.com/2008/12/10/welcome.aspx?ref=rssTony ClarkWelcome to my blog. Please check back soon for new entries.http://blog.dalbergandassociates.com/2008/12/10/welcome.aspx#Commentsb632a783-a92f-432a-a24e-8965b818fcbeWed, 10 Dec 2008 18:45:30 GMT