The tax credit, which is supposed to pay individuals up to $400 and couples up to $800, was President Obama’s signature tax break in the $787 billion stimulus package enacted in February, designed to increase weekly paychecks for 95 percent of working families.
Most workers started receiving the credit through small increases in their paychecks in April. The tax credit was made available through new tax withholding tables issued by the Internal Revenue Service, but the withholding tables do not take into account several common categories of taxpayers.
For example, a worker with two jobs gets a $400 boost in pay at each job, for a total of $800. That worker, however, is eligible only for a maximum credit of $400, so the remaining $400 will have to be paid back at tax time.
A married couple is eligible for an $800 credit. However, if both spouses work and make more than $13,000, the new withholding tables give them each a $600 boost, for a total of $1,200.
Also, a single student with a part-time job gets a $400 boost in pay. However, if students are claimed as dependents on their parents’ tax returns, they don’t qualify for the credit.
