This notice applies to U.S. citizens only – Nonresident Aliens are not eligible for the “Making Work Pay” credit.
The Internal Revenue Service released new withholding tables that will result in more take-home pay for millions of American workers.
The new tables incorporate the new Making Work Pay credit, one of the key tax provisions included in the American Recovery and Reinvestment Act of 2009 that recently became law.
Many higher-income taxpayers will see little or no change in their take-home pay. That’s because the credit begins phasing out for married couples filing a joint return whose modified adjusted gross income (AGI) is $150,000 or more and other taxpayers whose modified AGI is $75,000 or more.
Eligible monthly employees will see this change beginning with their April 1st paycheck. Eligible biweekly employees will see the benefit of this change beginning with their April 14th paycheck.
Employees don’t need to fill out a new W-4 withholding form to get the Making Work Pay credit reflected in their take-home pay. Individuals and couples with multiple jobs may want to submit revised Form W-4 forms to ensure enough withholding is held to cover the tax for their combined income.
Contact your professional income tax advisor or review IRS Publication 919 if you have any questions regarding adjustments to your Form W-4.
Employees who want to submit revised Form W-4 forms to ensure enough is withheld may complete the form on the Self Service Center under W-4 Tax Withholding.
Students from India should complete new W-4 forms requesting additional withholding from each paycheck for the remainder of 2009 and, if they are still NRAs that year, for 2010. It will, however, be difficult to arrive at an appropriate additional dollar amount for people whose gross pay varies significantly from paycheck to paycheck. Payroll simply wants to warn students from India of the potential for under withholding should their taxable wages exceed the total of their allowable personal exemption/s and one standard deduction so that they are not surprised if they find themselves in a balance-due situation when filing their 2009 and 2010 tax returns.
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