Making Work Pay
What is the Making Work Pay Credit?
In 2009 and 2010, the Making Work Pay provision of the American Recovery and Reinvestment Act will provide a refundable tax credit of up to $400 for working individuals and up to $800 for married taxpayers filing joint returns.
Who can claim the credit?
This tax credit is calculated at a rate of 6.2 percent of earned income and phases out for taxpayers with modified adjusted gross income in excess of $75,000, or $150,000 for married couples filing jointly.
You must have earned income for the year to receive this credit. The credit is allowed if you had income from self-employment.
Unemployment Benefits
What about unemployment?
Under the American Recovery and Reinvestment Act (ARRA), the first $2,400 of unemployment benefits an individual receives in 2009 are tax free. This provision applies only to benefits received in 2009. Normally, all unemployment benefits are taxable.
How will these new rules affect my Oregon tax return?
The Making Work Pay Credit may increase the amount of Oregon tax you must pay because it may reduce your Oregon deductions.
Oregon may or may not allow you to deduct up to $2,400 of unemployment benefits for the year.
- If Measure 66 passes on January 26, 2010, Oregon will NOT tax the first $2,400 of benefits you recieved in 2009.
- If Measure 66 fails, Oregon will tax all unemployment benefits you received in 2009.
If you paid expenses related to your work, you may be able to take advantage of certain deductions allowed under the law including:
Work Related Expenses
- Education
- Automobile
- Travel and meals
- Entertainment
- Gifts
- Supplies
- Union dues
If you incurred work-related expenses, you may be able to deduct them on Schedule A. Education expenses may also be eligible for a tax credit.
Please complete our Employee Business Expense Organizer and bring it with you to your tax interview.