As of April 1, many taxpayers will see an extra few dollars in their paychecks as a result of the Making Work Pay Credit. The credit is part of the American Recovery and Reinvestment Act of 2009, signed into law by President Obama in February 2009. The credit will provide up to $400 per individual worker and $800 per working married couple.

The credit will be administered through cuts in withholding at the employer level. The credit will phase out for individual taxpayers with AGI in excess of $75,000 (up to $95,000) or $150,000 for married couples filing jointly (up to $195,000).  If you are a higher income taxpayer, you will see little or no change in your pay.

The amount of the credit that you receive will be reported on your 2009 income tax return, but it is not taxable and you do not have to pay it back if you received the proper amount. If you do not have taxes withheld by an employer during the year because you are self-employed or because your withholding level is too low for the credit to apply, you can claim the credit on your 2009 tax return. This is a refundable credit, so if you qualify and you do not receive the entire amount, you can file to have any additional credit refunded to you at tax time.