A Professional Employer Organization

IRS Issues Guidance on the Making Work Pay Tax Credit

The IRS website has posted information on its website about the Making Work Pay tax credit under the American Recovery and Reinvestment Act (ARRA) of 2009. In tax years 2009 and 2010, ARRA provides a refundable tax credit of up to $400 for individual taxpayers ($800 for married filing joint taxpayers). The credit phases out for individuals with modified adjusted gross income of $75,000 to $95,000 ($150,000 to $190,000 for joint filers). The guidance clarifies that employers are not required to make determinations on an employee’s eligibility for the credit. Withholding will be made consistent with an employee’s W-4 on file.

We suggest all employees review the information on the IRS website to better understand how this credit will affect them. However, employees who fall into any of the categories below may have a negative impact when tax returns are filed so we strongly recommend they review the information on the IRS website and consult a CPA or other tax professional. Synergetic employees can not provide tax advice.

• Pensioners
• Married couples with two incomes
• Individuals with multiple jobs
• Dependents
• Some Social Security recipients who work
• Workers without valid Social Security numbers

Please visit the following links for more information.