Making Work Pay Credit
March 9, 2009 by: The Tax ManFor 2009 and 2010, most individuals with earned income can claim a refundable Making Work Pay Credit (MWPC of up to $400 ($800 for joint returns). The Making Work Pay Credit is the lesser of 6.2% of a workers earnings or $400.
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The credit effectively eliminates the first $400 of Social Security taxes. This credit is subject to phase outs as well. The amount of the MWPC is reduced as the taxpayer’s modified adjusted gross income exceeds $75,000 or $150,000 on a joint return. The 400 MWPC is phased out completely as modified adjusted gross income gets to $95,000 for a single individual, and the $800 credit on a joint return is phased out at modified adjusted gross income of $190,000.
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