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Here’s a copy of Kelly’s envelope stuffer

by April 7, 2009 24 Comments

Many of you asked to see the envelope stuffer used by HR Morning subscriber Kelly Kline to explain the stimulus-package changes to her employees. She was kind enough to send it in for posting on the site. Here it is. Feel free to cut and paste. (And let’s hear it for Kelly!)

President Obama’s Stimulus Tax Change

You will see reduced Federal tax withholdings effective on this check due to the stimulus tax changes going into effect. This means you may need to adjust your W-4 based on your individual tax position. You will need to speak with your tax preparer to decide if and how you should adjust this. Please review exceptions and requirements for eligibility. We cannot advise you on this matter and will not do so, as per the law.

This is a result of the Stimulus Bill recently signed by President Obama that includes the “Making Work Pay Tax Credit.” This tax credit is automatically applied to your check which is why you need to verify if you have to adjust your W-4 form tax settings. The IRS has revised the tax withholding tables so that taxpayers can see a tax benefit this year. Employers are required to implement the new withholding rates no later than April 1, 2009. Employees will not need to do anything to take advantage of the new withholding rates.

Who Qualifies & Who Doesn’t
1. Only U.S. citizens and resident aliens with a valid Social Security number are eligible for the Making Work Pay credit.

2. Anyone claimed as a dependent is not eligible for the credit. That means kids who are working, including college students, who are still claimed as dependents, are not eligible for the credit. Because the paycheck withholding is going to be adjusted by employers, working dependents may need to adjust the withholding annually to avoid owing tax at the end of the year.

3. Non-resident aliens, estates, and trusts do not qualify for the Making Work Pay tax credit.

4. However, individuals and couples with multiple jobs may need to adjust their withholding to have more taxes taken out if they expect not to qualify for the tax credit based on their total income.
a. This also applies to working dependents (who are not eligible for the credit) or working retirees (who may be eligible for a reduced credit).

5. The Making Work Pay credit starts to be reduced for individual filers making $75,000 in modified adjusted gross income, or $150,000 for joint filers. The credit is reduced by 2% of the amount of income in excess of $75,000 (or $150,000) threshold. The credit is completely phased out for individuals making $95,000 or more, or $190,000 for joint filers.

This information is being provided as a courtesy to employees so they can make the correct choices for their tax settings for this year and next year.

The IRS will help you calculate your 2009 W-4. You will need your 2008 return and your last paycheck stub. Go to http://www.irs.gov/individuals/page/0,,id=14806,00.html

Categories: Employment Law, In this week's e-newsletter, Management, Pay and Benefits
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  • http://www.mdiatlanta.com Annette

    Thank you Kelly!!

  • http://www.nerinc.org Debbie

    Thanks Kelly, for staying focused on the issue and not who to blame. Special thanks for sharing your payroll stuffer – the world would be a much better place if everyone were so gracious and helpful!

  • Maria

    Thank you Kelly for sharing.

  • Laurie

    Thank you very much Kelly.

  • BARBARA

    OK, SO HOW DOES A TAX BREAK ON $75,000 AND UP HELP THE APPARENT LOWER INCOME FAMILIES.

    THIS PACKAGE ONLY BENEFITS MANAGEMENT AND UP GROUPS OF PEOPLE.

  • http://HRMorning J

    Thank you so very much Kelly for being willng to share and doing such a wonderful job.

  • Michelle

    Barbara, re-read that section. the break is for people who make under 75,000.

  • Janise

    Thank you for sharing Kelly! I truly appreciate it!

  • Sonia McDonald

    This is awesome, Kelly. Thanks so much for sharing this. Some of my employees have asked how the Making Work Pay credit will work for them, and your payroll stuffer provides a clear, concise answer. I will be placing this in the upcoming payroll envelopes!

  • Valerie

    Thanks so much! I have been searching for something explaining this in a clear, need to know format – this is perfect!!!

  • Shirley Larsen

    Thank you Kelly for putting in the time to put the explanation of the “Making Work Pay Credit” together for employees.

  • Lorie Weaver

    My sincerest thanks Kelly for generating this payroll stuffer. This will be placed in our little newsletter and as a payroll stuffer . Your generosity is greatly appreciated .

  • Cindy Althouse

    Thank you so much for sharing!

  • Denice

    Kelly did an awesome job with the explanation of the “Making Work Pay Tax Credit”. I have to give credit to my payroll company who not only had the new tax tables set up in record time (the credit hit our checks the first pay period in March) but also provided me a summary to distribute to my employees. As we all know, HR has many daily items to deal with and it’s nice to have detailed accurate information provided for you that is beneficial to our employees. For those of you who do not have my payroll company, Kelly’s information is a blessing to be utilized.

  • http://HRMorning Diane Smith

    Thank you Kelly!

  • Lucy

    I vote Kelly hero of the week! Thanks Kelly!

  • Asa Satariano

    Thanks Kelly…this was a big help!

  • THERESA

    THANK YOU KELLY!!!!

  • THERESA

    THANK YOU KELLY!!!! I was wondering if anyone would be able to translate this into spanish.
    We have several spanish speaking employees & I am not that versed in the language.
    THanks

  • Stacey

    First off – thank you Kelly!!!

    Secondly, to Barbara…did you even read the tax-break info? People earning $75,000 + receive a REDUCED break; those earning $95,000 + receive NO TAX BREAK. This program is truly focused on the average American worker not the CEO’s and managers who earn $100,000 a year.

  • Lisa

    Thank you Kelly!!!

  • Sonia McDonald

    To Theresa: We are currently translating Kelly’s payroll stuffer into Spanish. Once it is completed, I will post it here for your use.

  • THERESA

    Thank you Sonia!

  • Sonia McDonald

    Here is the Spanish version.

    Estimulo del Presidente Obama – Cambios en Impuestos

    Usted debe ver reducidas las retenciones de los impuestos federales en su cheque de pago por los cambios en los impuestos, debido al paquete de estimulo, que está en efecto desde el 1ro de abril, 2009. Esto significa que usted tal vez necesite ajustar su W-4 basado en su posición individual de impuestos. Usted debería hablar con su preparador de impuestos para decidir si necesita y como debe hacer los ajustes. Por favor revise las excepciones y requerimientos para la elegibilidad. [Company name] no puede advertirle a usted sobre este tema y no lo hará, esto por ley.

    Este es el resultado del proyecto de ley de estimulo recientemente firmado por el Presidente Obama, que incluye “Haciendo que el trabajo pague el crédito de impuesto”. Este crédito de impuesto es aplicado automáticamente a su cheque, por lo cual usted necesita verificar si tiene que ajustar su forma de impuestos W-4. El IRS ha revisado las tablas de retenciones; de esta manera los contribuyentes pueden ver un beneficio en impuestos este año. Los empleadores deben implementar los nuevos porcentajes a retener a no más tardar del 1ro de abril, 2009. Los empleados no tienen que hacer nada para tomar ventaja de los nuevos porcentajes de retenciones.

    Quien califica y quien no
    1. Sólo ciudadanos de Estados Unidos y residentes extranjeros con un número de Seguro Social son elegibles para el beneficio de “el trabajo paga el crédito”.
    2. Cualquiera que sea reclamado como carga familiar no es elegible para el crédito. Esto significa que los muchachos que están trabajando, incluyendo estudiantes de universidad, quienes siguen siendo reclamados como cargas familiares, no son elegibles para el crédito. Debido a que el descuento en el cheque de pago es ajustado por el empleador, tal vez los dependientes que trabajan necesiten ajustar su retención anual en prevención de tener que pagar impuestos al final del año.
    3. Los extranjeros no residentes, herencias y fideicomisos no califican para el beneficio de “el trabajo paga el crédito”.
    4. Individuos y parejas con múltiples trabajos tal vez necesiten ajustar sus retenciones y así tengan más impuestos retenidos de su salario si ellos creen que no van a calificar para el crédito de impuestos basado en su ingreso total. Esto también aplica a los dependientes que trabajan (quienes no son elegibles para el crédito) o trabajadores retirados (quienes pueden ser elegibles para un crédito reducido).
    5. El crédito de “Haciendo que el trabajo pague” comienza a ser reducido para individuos que declaran $75,000 en modificación de ingreso bruto ajustado, o $ 150,000 para quienes declaran juntos. El crédito es reducido en un 2% del monto en exceso del ingreso de $ 75,000 (o $ 150,000). El crédito se deja de percibir cuando individuos que declaran solos exceden $ 95,000 o más, o $ 190,000 para quienes declaran juntos.

    Se está suministrando esta información como una cortesía para nuestros empleados así ellos pueden hacer las selecciones correctas para establecer los impuestos a retener para este año y el próximo.

    El IRS lo ayudará a calcular su W-4 del 2009. Usted necesitará su retorno del 2008 y su último cheque de pago. Vaya a: http://www.irs.gov/individuals/page/0,,id=14806,00.html