New Tax Cuts Kick In

By Amy Lester, NEWS 9

OKLAHOMA CITY -- Most people are starting to notice additional money in their paychecks, which is part of the federal stimulus plan.

Most people will get an extra $400 per person or $9 more a week, for the rest of the year. The idea is to stimulate the economy, and it's having an impact.

Terry Smith is like most Oklahomans. He works hard for every dollar.

"Every little bit helps right now in the economy," Smith said.

Two weeks ago, Smith noticed $9 more a week in his paycheck.

"I thought that was interesting," Smith said. "I knew it was coming, but I didn't know when, where or how."

That extra income is part of the Making Work Pay Tax Credit. Anyone earning less than $75,000 and single, or $150,000 and married will get a $400 boost.

"As most of the bills that come out of Congress, they're simple in the concept, but the execution of them gets a little more complicated," said CPA Fred Imel.

He said the law is tricky if a person has two jobs. Both employers may adjust withholdings so the employee may mistakenly get $400 twice.

"You could be upside down by the time you file your tax return and you could receive $800 worth of credit and you're only entitled to $400 of it," Imel said.

The best advice is to talk to the employer or an accountant to make sure you're not in the red.

"Your payroll department is the first place to go because it's not that complicated," Imel said.

The plan is to give 95 percent of Americans an extra $400 to spend, which Smith already did. He bought a television.

You'll receive a tax credit for the $400 or $800 when you file next year, so it will balance out, meaning you won't owe taxes on that money.

Those who are receiving Social Security, retired railroad workers, and disabled veterans will be eligible for a one-time-only tax credit of $250. If a Social Security recipient is also employed, they will be eligible for a Making Work Pay credit of $150.

More on the Tax Credit:
- IRS: The Making Work Pay Tax Credit
- CNNMoney.com: What You Need to Know About the Tax Credit