“Going green” takes on a different meaning this week, as many faculty and staff members notice a bit more money in their paychecks.
According to Juli Bejarano, interim payroll manager, the effect of President Barack Obama’s Making Work Pay tax credit will add to many employees’ take-home pay. The amount depends on each employee’s salary, marital status and existing tax allowances, or exemptions.
“We ran a sample based on random employees across the spectrum of our payroll,” Bejarano said. “The increase ranged from about $12 to about $30 per paycheck.”
The credit is part of the American Recovery and Reinvestment Act of 2009, which was passed in February. Those eligible may benefit in 2009 and 2010.
The credit allows single filers a credit of up to $400 and joint filers up to $800 per year.
Although more green in your wallet sounds good, Bejarano warns the increase could put a dent in next year’s taxes.
“The tricky part is: Just because you’re getting $20 more in pay doesn’t mean you’re eligible for the full tax credit,” Bejarano noted. “Getting an increase in take-home pay could result in some employees not having enough taxes withheld for the year.
“This is a short-term stimulus, but it could have long-term effects if you aren’t having enough money withheld.”
She advises employees to re-evaluate the amount currently being withheld from their paychecks in tandem with the stimulus tax credit.
The Internal Revenue Service offers an online calculator at www.irs.gov/individuals/article/0,,id=96196,00.html to help users figure out how many exemptions they should take. People at risk for having too little withheld include those with more than one job, joint filers with working spouses, those receiving income from rental properties or investments, and those who began receiving their credits in February or March.
The federal government asked employers to begin using newly released withholding tax tables April 1.
If you have questions regarding how the Making Work Pay tax credit affects your paycheck, e-mail email@example.com.