2008 $400 Tax Credit = 2009 Taxable Income?

[dex]

Does the 2008 $400 Tax Credit = $400 2009 Taxable Income?



American Recovery and Reinvestment Act of 2009 - Wikipedia, the free encyclopedia

$116 billion: New payroll tax credit of $400 per worker and $800 per couple in 2009 and 2010. Phaseout begins at $75,000 for individuals and $150,000 for joint filers

Tax credit - Wikipedia, the free encyclopedia

The term tax credit describes two different concepts:

• The first is a recognition of partial payment already made towards taxes due.
• The second is a state benefit paid to workers through the tax system, which has the effect of increasing (rather than reducing) net income.

 

[Bikerdude]

If you mean the Bush tax stimulus payment made in 2008, then it is not taxable income.

 

[dex]

If you mean the Bush tax stimulus payment made in 2008, then it is not taxable income.

I'm referring to the one just announced - the $13/week I hear on the news.

 

[JOHNNIE36]

I heard onthe news today that the $400-$800 tax credit is going to be taxable on you 2009 tax return. This is not the same as a "stimulus check". They aren't redoing the tax tables. Didn't catch any specifics about what income levels may or may not be exempt from this tax. It's just like the max $8000 tax credit for first time home buyers. Since it's a tax credit, it will be taxable but over some longer period of time. Obamanomics!!!

 

[thefinancebuff]

Does the 2008 $400 Tax Credit = $400 2009 Taxable Income?



American Recovery and Reinvestment Act of 2009 - Wikipedia, the free encyclopedia

$116 billion: New payroll tax credit of $400 per worker and $800 per couple in 2009 and 2010. Phaseout begins at $75,000 for individuals and $150,000 for joint filers

Tax credit - Wikipedia, the free encyclopedia

The term tax credit describes two different concepts:

• The first is a recognition of partial payment already made towards taxes due.
• The second is a state benefit paid to workers through the tax system, which has the effect of increasing (rather than reducing) net income.

First of all, there is no $400 tax credit in 2008, only in 2009 and 2010. Second, it's a tax credit, which reduces tax dollar for dollar (receive check if the person doesn't pay tax). It's not taxable income.

 

[dex]

First of all, there is no $400 tax credit in 2008, only in 2009 and 2010. Second, it's a tax credit, which reduces tax dollar for dollar (receive check if the person doesn't pay tax).

A senior moment me just had.

I should have wrote - 2009/2010

 

[gindie]

The way I understand it is that the oft-quoted $13 per paycheck is a pre-payment of a tax credit. When you do your 2009 taxes in 2010, you will claim your allowable amount of the credit (6.2% of earned income, subject to a $400 maximum for singles or $800 for married).

It is quite possible that the total of the reduced withholding amounts over the year for a household will exceed the 400/800 limit (especially if you are a 2-earner couple or have multiple jobs). You will adjust for that when you do your taxes in 2010.

 

[dex]

The way I understand it is that the oft-quoted $13 per paycheck is a pre-payment of a tax credit. When you do your 2009 taxes in 2010, you will claim your allowable amount of the credit (6.2% of earned income, subject to a $400 maximum for singles or $800 for married).

It is quite possible that the total of the reduced withholding amounts over the year for a household will exceed the 400/800 limit (especially if you are a 2-earner couple or have multiple jobs). You will adjust for that when you do your taxes in 2010.

Txs - I heard somewhere that since the tax tables were not adjusted - a person would have less withheld this year but have to pay it back next year when they did their taxes. Maybe that just is for those over $75K.

 

[gindie]

Txs - I heard somewhere that since the tax tables were not adjusted - a person would have less withheld this year but have to pay it back next year when they did their taxes. Maybe that just is for those over $75K.

Correct. The tax tables are not adjusted. If a person did exceed the income limit for being able to claim any part of the credit, then he would have to "pay it back" with his return next year.

 

[bubba]

I heard somewhere that since the tax tables were not adjusted - a person would have less withheld this year but have to pay it back next year when they did their taxes. Maybe that just is for those over $75K.

That's what I thought as well - that the tables were not adjusted and since the withholding is reduced, you will have to settle up next year when your return is filed. I'll admit I haven't researched it yet.