Jan. 21, 2010
Taxpayers beware
by Paula Van Brocklin
You may want to examine your 2009 W-2 form closely to see how the Making Work Pay tax credit, passed by Congress last spring, will impact your federal tax liability this year.
This legislation required the Internal Revenue Service (IRS) to implement new tax tables that provided a $400 per individual or $800 per married couple tax credit for 2009. This resulted in a reduction in federal tax withholding of about $45 per month for individuals claiming single, and $67 per month for those claiming married. For ISU employees, the reduced withholding started with the March 2009 paychecks.
Too much of a good thing?
Though it's nice to receive a little extra money in your paycheck each month, employees with more than one job or married couples with both spouses working could have a federal tax liability at year-end. Individuals who file single and have only one job should notice little or no additional federal tax liability.
If you are in one of the above situations and didn't make the necessary adjustments on your W-4 for 2009, you may be on the hook for a greater federal tax liability this year. The tax credit is still in effect for 2010, so now's the time to adjust your federal withholding amount, if necessary. To make changes, complete a new W-4 form. You also may want to consult your tax adviser.
More information about the Making Work Pay tax credit is on the payroll web site.
