The Internal Revenue Service has released new withholding tables that will result in more take-home pay this spring for millions of American workers.
The updated tables are now posted at the Web site www.IRS.gov. They incorporate the new Making Work Pay credit, one of the tax provisions included in the American Recovery and Reinvestment Act of 2009 that became law in February.
For most taxpayers, the additional credit will automatically start showing up in their paychecks this spring, IRS Commissioner Doug Shulman said.
“Since employers and payroll companies will handle this change, people typically won’t need to take any additional action. The IRS will continue working to implement this and other provisions of the new law as quickly as possible,” Shulman said in making the announcement.
The revised tables, along with other instructions related to the new tax law, are included in the revised IRS Publication 15-T, which was reissued Monday. This publication is posted at www.IRS.gov and will be mailed to more than 9 million employers in mid-March. The IRS asks that employers start using the new tables as soon as possible, but not later than April 1.
Most workers will see a net pay increase from the credit. They do not have to fill out a new W-4 withholding form to get the Making Work Pay credit reflected in their pay.
Individuals and couples with multiple jobs may want to submit revised W-4 forms to ensure they are having enough tax withheld to cover their tax liability for combined incomes. IRS Publication 919 covers the details on tax withholding.
Available for tax years 2009 and 2010, the Making Work Pay credit is 6.2 percent of a taxpayer’s earned income with a maximum credit of $800 for a married couple filing a joint return and $400 for other taxpayers.
The IRS said most workers will qualify for the maximum credit. Because it is refundable, people can get it even if they owe no tax, most low-income workers will also qualify for the full credit.
Higher income taxpayers will see little or no change. The Making Work Pay credit is phased out for a married couple filing a joint return whose modified adjusted gross income (AGI) is between $150,000 and $190,000 and other taxpayers whose modified AGI is between $75,000 and $95,000.