Change in Paycheck

The IRS has issued new withholding tables. They asks that employers start using these new tables as soon as possible but not later than April 1. Most workers will see a boost in their take-home pay soon.

Last year most of those who file tax returns, received a stimulus check. As married joint filers, Bob and I received $1,200. The goal of the new stimulus monster spending bill aims to provide a tax credit of $400 or $800 (for marrieds) for 2009 and 2010.

There is a fade out for higher earners. Adjusted gross incomes (the last number on the first page of your 1040 tax return) in excess of $75,000, (singles) or $150,000 for married couples filing jointly are the cut offs.

This change in your paycheck should soon be evident. Workers will get the benefit of this change without any action on their part. This means that workers do not need to fill out a new W-4 withholding form.

It was confusing. I knew they were not lowering the tax brackets and tax time next year may be difficult having to come up with the difference they allowed us to keep through reduced withholdings. However, with the work credit, the effect should be minimal.

Hope it is clearer for you. For now, we'll just get more take-home pay. Spend your $13 or so per week wisely.

'til later