For those of you even care about tax legislation that is not final... the first link is the summary from Ways & Means and the second link is the text. See Division B, Tax Provisions in the text of HR 1.
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Tax Provisions Contained In House Stimulus Bill
Jan 29, 2009
9 Replies
all that money, and nothing for me!
"?Making Work Pay? tax credit. The bill would cut taxes for more than
95% of working families in the United States. For 2009 and 2010, the bill would provide a refundable tax credit of up to $500 for working individuals and $1,000 for working families. This tax credit would be calculated at a rate of 6.2% of earned income, and would phase out for taxpayers with adjusted gross income in excess of $75,000 ($150,000 for married couples filing jointly). Taxpayers can receive this benefit through a reduction in the amount of income tax that is withheld from their paychecks, or through claiming the credit on their tax returns."Maybe I am missing something here. It says you get a tax credit of
6.2%. If you earn exactly $150,000, that is over $9,000 in credit. Yet the amount is apparently capped at $1000. If they are going to offer a rate of 6.2% and cap the credit at $1000, why does the phase out begin at $150,000 of earned income? Maybe that is the way they want it, but it sure seems odd to me.Best wishes.
It doesn't say you get 6.2%. It says you get the lesser of 6.2% or $500. The 6.2% represents the rate of FICA tax. The amount is a refundable tax credit. And... like most tax credits, it phases out if your income gets too high.
It helps to obfuscate the nature of all this "tax cut" stuff. it is really welfare in disguise.
I suppose, also, that the phase out means that with enough income, you don't even get the $1,000. With enough income, you just get to pay taxes, not get any of the tax relief.
It's capped not at 1000, but at 500$. Now, my problem will be to explain to my (retired and not working) wife why she won't get any money.
ChEAr$, Harlan Lunsford, EA n LA
Well.........I for one am glad I'm paying taxes.
ChEAr$, Harlan Lunsford, EA n LA
"I love the smell of a tax credit in the morning." A line never used by Francis Ford Coppola in any movie as far as I can tell.
You see Harlan, there's time to get her a job so she has some earned income in each of the years at issue.
You'd have to run the numbers to see if it's doable, but you might have a small business owner putting dear ol' mom and dad on payroll for the tax credits.
"Oh the horrors." Wait, that line was used.
Then suppose my corporation is the small business putting her to work? (Forget for a moment she says she will never work for me.)
Cost to my corporation will be her salary plus another 7.65%, plus SUTA and FUTA (combined 1.6%), just so she can get a credit for her 6.2% up t0 $500? Don't need to do any more math.
ChEAr$, Harlan Lunsford, EA n LA
"Harlan Lunsford" wrote
Yeah, but think of all the "good" help you'll get.
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