Making Work Pay Credit

The Making Work Pay Credit allows a dollar for dollar reduction of your taxes equal to 6.2 percent of your wages up to a maximum credit of $400 for single filers, $800 if you’re married and file jointly.  the credit will be available for 2009 and 2010.  Through the end of 2010

Uncle Sam put limitations on who will be eligible to take the credit. For high income taxpayers, those with modified adjusted gross incomes exceeding $75,00 for single filers, $150,000 for joint filers, the credit will be reduced by 2 percent of your income in excess of these limits.  For example, if you were a single taxpayer with modified adjusted gross income of $90,000, ($15,000 over the $75,000 limit) your Making Work pay credit would be $100.  This is calculated by multiplying your $15,000 excess income by 2 percent to get your phase-out of $300 and then subtracting your phase out from the $400 maximum credit allowed.  Other limitations disallow the credit for nonresident aliens and dependents claimed on another taxpayer’s return.