Making Work Pay and Government Retiree CreditsMonday, August 17, 2009 9:45
Knowing the tax credits which one can claim when filing income tax returns is an important factor in properly managing one’s finances. Each year the government revises tax code, changing current credits, and making new credits available. In 2009, there are two new tax credits available for eligible tax payers.
The first is called the Making Work Pay Credit. To qualify, one’s Annual Gross Income (AGI) must be $95,000 or less ($190,000 if filing jointly), and the filer must not be claimed as a dependent on any other taxpayer’s return. The credit equals 6.2% of the income filed by the taxpayer, up to $400 ($800 if filing jointly).
The second new credit available is the Government Retiree Credit. If a tax payer receives a pension (including annuity payments) for services performed for the federal or a state government, he or she will qualify for this credit, so long as the service was not covered by social security. This credit may be up to $500, if married and filing jointly, and both spouses performed such service. For single filers the credit totals $250. Those receiving an economic recovery payment do not qualify for the Government Retiree Credit; however, having a spouse who receives an economic recovery payment is not a disqualification even if filing a joint return.