No joke: Tax cut benefits should appear by April 1
| Obama aims to cut deficit in half by raising taxes, cutting war spending |
By Liz Sidoti
Associated Press
WASHINGTON — It took only weeks for the notoriously slow Congress to pass the $787 billion economic stimulus package. President Obama signed it into law less than one month into his presidency.
So when should most people hope to start seeing the benefits of tax cuts in it?
By April 1, according to the president.
"Never before in our history has a tax cut taken effect faster or gone to so many hardworking Americans," Obama said yesterday in his weekly radio and Internet address.
The president said his signature two-year "Making Work Pay" tax break will affect 95 percent of working families, and, in six weeks' time, a typical family will start taking home at least $65 more every month.
Taxpayers won't get a separate check mailed to them like many did with last year's one-time payment designed by the Bush administration to help boost the economy.
Instead, Obama's credit — up to $400 credit for individuals and up to $800 credit for married couples — is to be doled out through the rest of the year through paychecks. Most workers are to see about a $13 per week increase in their take-home pay. In 2010, the credit would be about $7.70 a week, if it is spread over the entire year.
People who do not earn enough money to owe income taxes are eligible for the credit, an attempt to offset the payroll taxes they pay.
But the credit is phased out for higher-income taxpayers, defined as individuals who have a modified adjusted gross income of between $75,000 and $95,000, and married couples filing jointly who make between $150,000 and $190,000. Thus, the administration says many of them will see little or no change in their paychecks.
In concert with Obama's announcement, the Treasury Department yesterday began directing employers to reduce the amount of taxes withheld from people's paychecks in accordance with the new law as soon as possible and not later than April 1. The IRS also released new withholding tables on its Web site to help guide employers in reflecting the new credit. It says more instructions about tax provisions in the law will be available next week, and will be mailed to more than 9 million employers next month.