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Payroll Withholding Drop Attributable To New Credit
If you noticed a drop in your payroll withholding without changing your W-4 filing status or exemptions, it was probably due to the new “Making Work Pay Tax Credit.” This is being paid to taxpayers in advance of filing their 2009 tax returns by way of a payroll withholding reduction.
The reduction was accomplished by tweaking the withholding tables, which does not consider your specific tax circumstances. Unless your income is above $75,000 ($150,000 for joint filers), you will probably qualify for the tax credit of $400 ($800 for joint filers) to offset this reduction.
If you are concerned about the reduction being excessive and possibly causing a problem at tax time, compare your reduced withholding for the year with the credit. If the difference is significant, you may want to call this office for a review.
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Disclaimer: The tax advice included in this newsletter is an overview of some complex tax rules and is not intended as a thorough in-depth analysis of the tax issues discussed. Do not act on the information included in this newsletter without first determining how these issues apply to your particular set of circumstances and if there are any special tax laws or regulations that might apply to your situation.
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