IRS makes available new taxation tables
As part of the economic recovery bill, most workers will receive a credit calculated at a rate of 6.2 percent of annual earned income. It is a refundable tax credit of up to $400 for working individuals and up to $800 for married taxpayers filing joint returns, according to Luis D. Garcia, media spokesman for the IRS.
The credit will phase out for taxpayers with adjusted gross income in excess of $75,000, or $150,000 for married couples filing jointly. Beginning in 2010, the same benefit will be spread out for the full year, reducing the per-week tax reduction in half.
The increase will occur because the federal income tax withholding tables have just been changed under the Making Work Pay component of the stimulus bill. Most people will start seeing the increase in their paychecks around April 1, Garcia noted.
The IRS issued the new federal employment tax withholding tables two weeks ago, and the IRS is asking employers to start using the new tables as soon as possible, but no later than April 1, Garcia said.
The new tax withholding tables can be viewed at www.irs.gov/pub/irs-pdf/n1036.pdf