Making Work Pay Provision of the American Recovery and Reinvestment Act

For tax years 2009 and 2010, the Making Work Pay provision of the American Recovery and Reinvestment Act (ARRA) will provide a refundable tax credit of up to $400 for working individuals and $800 for married tax­payers filing joint returns. Because the credit is refund­able (people can get it even if they owe no tax), most low-income workers will qualify for the full credit.

Taxpayers will not receive a separate check from the IRS like they did with last year’s economic stimulus payment. The benefit will be spread out over the pay­checks they receive beginning this spring and continue until the end of the year. Eligible workers do not need to fill out new W-4 withholding forms to receive the Mak­ing Work Pay credit. New federal withholding tables are incorporated in the payroll calculation and most workers will see an increase in their take-home pay.