Saying Goodbye to a Tax Credit
For tax year 2011, employees had 2% less withheld from their gross paychecks from both social security and medicare tax withholdings. This gave these same employees a slightly higher net paycheck throughout the year.
Unfortunately, this immediate incentive took the place of the “Making Work Pay” credit that taxpayers enjoyed for tax years 2009 and 2010. The “Making Work Pay” credit was awarded in the amount of $400 for individuals and $800 for joint filers; with the latter amount doing one of two things for joint filers: it either increased their refund or decreased their tax liability at the end of the year.
But take note again that the “Making Work Pay” credit was only made available for the last two years of tax filing incentives, and has been discontinued for tax year 2011. Therefore, and again, considering all else stays the same, taxpayers will see a slight difference when they file their taxes for 2011. And this is mostly due to the 2% decrease in social security and medicare tax withholdings from employee paychecks.