No, I'm not talking about adjusting your withholding, although that's always a good idea so that you pay in through payroll taxes just what you'll owe the IRS when you file.I'm talking about what your first paycheck of 2010 is likely to look like. For some, it will be less than they got in their final 2009 check.
The reason is more withholding changes because of the Making Work Pay credit.
Yep, that provision in the American Recovery and Reinvestment Act of 2009, aka the stimulus, that was supposed to put more money in our hands will appear to some workers to be diminishing their take-home pay.
Here's why. Although the $400 due each worker was for the full 2009 calendar year, the withholding tables that accounted for the paycheck payouts went into effect in April. That meant the $400 was doled out over just nine months instead of 12.
Basically, using rough math, workers got around $44 a month extra for those last nine months of last year.
But when you spread the $400 over the 12 months of 2010, that comes to just more than $33 a month.
So while you are indeed getting $10 a month less now than you did at the end of 2009, you still will get the full $400 as long as you work through December 2010.
I just thought you should know so you wouldn't go ranting to your payroll office -- or worse, to your boss! -- about your "pay cut."Related posts:
- Give yourself a tax-related raise
- Making Work Pay tax problems … again
- Schedule M, yet another new form
- State withholding and the stimulus
- Californian's face added withholding
- Withholding lessons from filing stats
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