IRS Releases New Withholding Tables


The IRS on Monday released withholding tables that reflect a new tax credit, dubbed the making work pay credit, created by the stimulus package.

 

The making work pay credit was created by the American Recovery and Reinvestment Act, PL 111-5, which President Obama signed on Feb. 17. The credit equals 6.2% of a taxpayer’s earned income up to a total credit of $400 for individuals and $800 for joint filers (IRC § 36A). It is retroactive to the beginning of 2009 and is set to expire after 2010. The credit begins phasing out at a rate of 2% of modified adjusted gross income (MAGI) above $75,000 for individuals and $150,000 for joint filers.

 

The IRS has asked employers to use the new withholding tables to adjust workers’ take-home pay to account for the new credit as soon as possible but no later than April 1. The credit will then be spread over eligible taxpayers’ paychecks for the rest of the year.

 

The IRS emphasizes that employees do not have to fill out a new W-4 withholding form to have the making work pay credit reflected in their take-home pay; employers should automatically adjust their withholding, based on the new tables.

 

The new withholding tables can be downloaded from the IRS at www.irs.gov/pub/irs-pdf/n1036.pdf.

 

 

SPONSORED REPORT

2018 financial reporting survey: Challenges and trends

Learn the top reporting challenges that emerged in a survey of more than 800 finance, accounting, and compliance professionals across the world, and compare them with your organization's obstacles.

PODCAST

How the skill set for today’s CFO is changing

Scott Simmons, a search expert for large-company CFOs, gives advice for the next generation of finance leaders and more, including which universities are regularly producing future CEOs and CFOs.