The credit began in 2009 and is also available to taxpayers in 2010 as part of the American Recovery and Reinvestment Act (ARRA). It consists of two components:
- the new form Schedule M which includes a $400 credit for most taxpayers ($800 for married couples filing together) and
- a change in employer withholding.
Unfortunately, the new withholding could negatively impact of a number of taxpayers this year including:
- Dependents who can not claim their own exemption
- Single taxpayers with more than one job
- Joint filers where both spouses work or one of them have multiple jobs
- Retired taxpayers who receives a monthly pension
- Workers without valid Social Security numbers
Taxpayers can adjust their withholding for 2011 by filing a revised Form W-4 and submit to their employer. You can use IRS Pub. 919 for additional assistance in calculating your tax withholding.
For more information on the Making Work Pay Credit, please refer to the Schedule M instructions.