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Video: Making Work Pay Tax Credit 2009

Updated for Tax Year 2010


OVERVIEW

Note: The content of this video applies only to taxes prepared for 2009 and 2010. It is included here for reference only.

Most Americans enjoyed an instant tax break last year thanks to the Making Work Pay Tax Credit. But some may face an unexpected tax bill in April.


Hi, I'm Michael Alban with an alert from TurboTax.

Most Americans enjoyed an instant tax break last year thanks to the Making Work Pay Tax Credit. But some may face an unexpected tax bill in April.

The break took the form of lower withholding taxes, and amounted to $400 a year for single workers and $800 for two-income couples.

If you were eligible and paid withholding taxes in 2009, you already took home that benefit in fatter paychecks. If you're self-employed, the credit will apply when you file your 2009 return.

If you hold more than one job or your spouse works, be alert. In some instances, withholding adjustments bestowed two tax cuts when you're entitled to only one. Your tax refund could be reduced or you could even end up with a tax bill instead of a refund.

Unfortunately, you can't turn the clock back. But you can adjust how much your employer withholds in 2010, when the same tax cut applies.

Ask your employer for form W-4. Then adjust your withholding by altering the allowances you take or by entering an additional amount to withhold. This might reduce your paycheck in the short run, but it should make things easier at tax time.

Not sure how much to withhold? Grab your most recent paycheck and try Intuit's Paycheck Optimizer, at www.intuitlabs.com.

For more information about this tax credit and other tax topics, visit TurboTax.com.

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The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.


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