Many people believe that the Stimulus Act is for big issues like the car industry or big banks. You thought wrong. However, the intent was also to benefit the normal person: YOU!
Two benefits provided to individual tax payers through the stimulus act are the “Making Work Pay”-Refundable income tax credit and Expanded Earned Income Tax Credit (EITC).
“Making Work Pay”-Refundable income tax credit: This credit is very simple to understand. Basically, ANYONE who is paying taxes will receive this credit with $400 in tax credits going to single tax payers, and $800 going to married couples filing a joint return. However, there are income restrictions that go along with this credit; for single tax payers their income may not exceed $75,000, and married couples filing jointly cannot exceed $150,000. Further, this is not a tax credit that you see on your tax return. This is actually an increase in take home pay that individuals saw throughout the year through smaller withholding dollars. Be aware of it, and if your income is on the higher end, be prepared to pay it back!
Expanded Earned Income Credit (ETIC): The ETIC provides relief in the form of a credit and is for tax payers who are earning less than $58,279. In order for more people to qualify the stimulus act expanded the eligability by increasing limits and increases in the credit for families with three or more children. Here is an example of this credit works: Suppose you make $53,279 and you are a single tax payer with 3 or more qualifying children, the maximum amount of credit you can attain would be $5,657.
ETIC and “Making Work Pay” Charts will provide you with complete charts that let you know how much credit someone can earn and what qualifications need to be met to earn the credit.
