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The Making Work Pay tax credit was a personal
credit Credit (from Latin verb ''credit'', meaning "one believes") is the trust which allows one party to provide money or resources to another party wherein the second party does not reimburse the first party immediately (thereby generating a debt) ...
provided in tax years 2009 and 2010 to U.S. federal income taxpayers."The tax hike nobody's talking about"
Blake Ellis, CNN, 2010-07-27 It was authorized in the
American Recovery and Reinvestment Act of 2009 The American Recovery and Reinvestment Act of 2009 (ARRA) (), nicknamed the Recovery Act, was a stimulus package enacted by the 111th U.S. Congress and signed into law by President Barack Obama in February 2009. Developed in response to the Gr ...
. The credit was given at a rate of 6.2 percent of earned income up to a maximum of $400 for individuals or $800 for married taxpayers. Making Work Pay could be claimed by single filers making between $8,100 per year and $95,000 per year. Joint filers in the range of $8,100 and $190,000 could claim it annually. Withholding formulas directed employers to increase take-home pay immediately without action from employees. Taxpayers with multiple jobs or self-employed had to adjust withholding to avoid inadvertently receiving multiple credits. Workers with multiple jobs, or unemployed, had the option to delay receiving the credit and receive instead a lump sum (all $400 to $800 at once) calculated on the tax return filed in the following year. Reconciling the credit required filing ''Schedule M'' with the ''Form 1040'' personal income tax return. The policy concept behind the Making Work Pay tax credit was to stimulate consumer spending, implemented as part of President
Barack Obama Barack Hussein Obama II ( ; born August 4, 1961) is an American politician who served as the 44th president of the United States from 2009 to 2017. A member of the Democratic Party, Obama was the first African-American president of the ...
's stimulus package in 2009. Because Making Work Pay contributed to higher take home pay by reducing withholding, it was assumed that the recipients would spend the majority, if not all, of the credit. The credit was not extended to tax year 2011, and has not been considered since then. The Democratic bill to extend the credit was defeated by the newly elected Republican controlled House of Representatives in 2010.


See also

*
Earned Income Tax Credit The United States federal earned income tax credit or earned income credit (EITC or EIC) is a refundable tax credit for low- to moderate-income working individuals and couples, particularly those with children. The amount of EITC benefit depends ...


References

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External links


Making Work Pay Tax Credit information at IRS.govTax Policy Center Tax Topics: 2011 Budget Tax Proposals
''Congressional Research Service''
Sec. 1001
of the
American Recovery and Reinvestment Act of 2009 The American Recovery and Reinvestment Act of 2009 (ARRA) (), nicknamed the Recovery Act, was a stimulus package enacted by the 111th U.S. Congress and signed into law by President Barack Obama in February 2009. Developed in response to the Gr ...
Personal taxes in the United States Tax credits