Ask The Taxgirl: Making Work Pay Credit (Once More With Feeling)

Taxpayer asks:

Hello,

I appreciate reading your comments about this topic and hope that you can tolerate one more.

First, do I understand it correctly that married couple filing jointly can claim $800, even if only one of them earned an income?

Second, I’ve never heard about this credit so I went to the IRS site which says

http://www.irs.gov/newsroom/article/0,,id=205922,00.html

“For people who receive a paycheck and are subject to withholding, the credit will typically be handled by their employers through automated withholding changes to be made in early spring 2009. “

So, yes, one of us was a salaried employee for part of the year and withholding were reduced. Can we still claim the full credit, or do we need to reduce it by the decrease in withholding?

Thank you,

Taxgirl says:

Yes, a married couple is entitled to the entire credit even if only one taxpayer worked. The credit is based on filing status. It may be reduced if one or more of you received the Economic Recovery Payment during the year. See the instructions on Schedule M for more information (will download as a pdf).

The adjusted withholding doesn’t affect the amount of your credit – it was just an attempt to get more money in your pocket during the year. You can read more about withholding and the Making Work Pay Credit here.

Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
If you have a question, here’s how to Ask The Taxgirl.

Kelly Phillips Erb

Kelly Phillips Erb is a tax attorney, tax writer, and podcaster.

See Full Bio