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No Stimulus Check This Year – Pay Yourself First Instead

by Ryan Guina

There will not be an economic stimulus check this year, at least not like last year’s economic stimulus check. No, this year’s stimulus is different. Instead of receiving a check, the Treasury Department has instructed employers to reduce the amount of taxes they withdraw from each paycheck. Starting April 1, you will start seeing a little extra money in your paycheck – about $45 per month for a single tax filer.

Making Work Pay tax credit

The 2009 Economic Stimulus Recovery Bill includes a section called the Making Work Pay credit, which gives working families a $400-$800 earnings credit. But instead of sending out checks like last year, the government decided that withholding fewer payroll taxes would be a more efficient way of giving people a tax break. It should be automatic, so there won’t be confusion about when checks go out and the Treasury won’t have to print and mail checks (that was a  fiasco!).

Pros and cons of the Making Work Pay tax credit. The downside is that most people won’t notice they are bringing in more money each check and many will fritter away without a second thought. The positive is that it forces people to save their money if they want this tax credit to make a difference.

What can you do with an $11 per week tax credit?!

The same thing you can do with a check for $400, but you need to make sure you save the money instead of letting it slip through your fingers each week.

Pay yourself first. $11 each week isn’t a lot of money, but then again, Rome wasn’t built in a day. Even small savings can grow large if you save consistently.

I challenge you to save your Making Work Pay credits. You will begin receiving the extra stimulus money starting April 1, 2009. You might not notice a big difference at first – after all, it is easy to miss $11 per week. But because it is so easy to miss is the reason you should save it!

$11 per week is less than $2 per day. If you can do it, set up a system to automatically save that money each week. Automatically transfer it to an online high-yield savings account where you can earn interest on your savings, or place it in a piggy bank at home. It doesn’t matter; just save it! Before you know it, those invisible $11 bonuses add up to a more meaningful amount of money, and more importantly, you started a good habit of saving money for your goals.


Published or updated April 12, 2013.
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1 Seth

The goal of the stimulus is to stimulate the economy by having people spend more. With the money be included in people’s paychecks (and in such small amounts) most people won’t even notice the extra money, but they will spend it. Very, very sneaky, if you ask me.

2 Ryan

Very true, Seth. I’m sure most people won’t even notice it and the money will just vanish as though it were never there. Perhaps that is the goal.

3 Neal Frankle

I like it.

We don’t need no stinkin’ stimilus package. We can stimulate our own personal economy!

YES!

4 Enrique S

Challenge accepted! I suppose Seth is right – last year’s stimulus check went right in the bank. By giving a small amount each week, most people will probably spend it. I plan on saving this Making Work Pay credit, too.

5 Michigan Lady

GREAT POST!

6 Manshu

I think most people will not give this a second thought. A lot will not even notice the extra payment.

And that is exactly the intent. Getting people to spend the “extra” money and not save it.

7 Curious Cat Investing Blog

Good idea. Consider increasing your 401k contribution.

8 Bankman

Good idea – I recommend saving on autopilot. It doesn’t take long to add up to a lot of money!

9 Tina

Just curious, rumor has it that this “stimulus” tax credit will actually hit us at the end of the year? IE… end up paying it back. Any thoughts?

10 Ryan

Tina: I don’t think we will have to pay it back – it is a tax credit, which means it is deducted from our taxes and we won’t be responsible for it. However, there are some people who may have t opay it back if they end up earning more than the maximum income for this tax credit.

A full credit will be given to individuals making $75,000 or less, or $150,000 or less for couples. Partial credits will be given up to $100,000 for individuals or $200,000 for couples. More info about the Making Work Pay credit.

The US and it’s citizens will be paying for this for a long time though, in terms of how long it will take to recover from this recession and the bailouts.

11 linda

i think its good for the people that have the actual amount of tax takeing out each week. for those of us who have to have more tax taking out each week we will not see any differents at all. their will be no change to what you bring home each week. their will not be $11.00 dollars each week to save . Iwill be paying for someone else to benifit by this . this is normal .

12 garry

What if you where laid off how does this apply for those?

13 Ryan

Garry: Sorry to hear you were laid off. Check out this article for information about the 2009 Economic Stimulus Plan Unemployment and COBRA Benefits. I hope this article helps and that you will find new work

14 Jan

I get paid this Friday on March 13th…and my tax break is already on my paycheck! One month before the scheduled April 1 date. $20.00 more, I am paid bi-weekly therefore that is $40.00 a month, my husband’s will be $40.00 a month as well. That is $80.00 a month that we WILL put back into the economy because it isn’t enough to save, we need it to help buy groceries. That is what the whole stimulus plan is about. If you mutiply $80.00 by 1,000,000 people that is $80,000,000 and that is my friends, stimulating the economy. Just what it was meant to do. It wasn’t meant to sock away and try to save it, it wasn’t meant to help get you out of debt, it was meant to STIMULATE the economy. You win by having a few extra bucks to buy that gallon of milk and loaf of bread and by helping kindle this country back to the state that it was before Bush left it in ruins. We as Americans should embrace it, support it and do our utmost to help get this country back on track so that the people that have lost their jobs can get new jobs and so that those of you who still have jobs can keep them! Those of you who are still employed, quit grumbling, quit whining and complaining that you can’t do anything with a measly $11.00 bucks, YES YOU CAN, you can give it back to the Country that has been so good to you. You can get down on your hands and knees and Thank the Good LORD above that you were priviledged to be born in the land of the free with opportunity unlike any other country in the entire world…”My fellow Americans, ask not what your country can do for you; ask what you can do for your country” John F. Kennedy/January 1961

15 day dreamer777

Damn, I was expecting a check for 400-500 bucks… at least give us a choice to either have our tax cut or get a check, sounds my reasonable.. hehe

16 Marilyn

What if you’re self-employed? What if you’re a seasonal or part-time worker? Neither my spouse nor I can find full-time jobs anywhere. We don’t qualify for unemployment either. Do we just not get any of this supposed tax credit?

17 Maria

Marilyn,

I am wondering the same thing. Hence, a big problem with Obama: He is vague about everything! My husband gets a regular check, so I guess he should see something today. But, I am self employed. I wonder if he will get mine in his paycheck???? Or, what about in your case, not working a regular job? But, actually, even if you work part-time, you are getting a check that takes out taxes, I assume? IF so, yours should show up in that check, too.

But, for self-employed, I have NOT HEARD ANYTHING about that at all. Even with SS, I heard they will get more in those checks. Vague is Obama’s middle name, I guess.

18 Ryan

Marilyn and Maria: My guess is that if/when you receive a paycheck for seasonal work, you will pay fewer taxes at that time. If you are self-employed you will probably see those tax breaks at the end of the year, or possibly when you file your quarterly estimated taxes. I’m sorry I can’t offer you a better answer.

19 Michelle

I have a question about the tax credit: How does it affect my tax return for 2009 next year?

20 derifter

Like Jan, I noticed an extra $11 two weeks ago. I understood it was supposed to be $13/wk beginning April 1st. Why the change?

21 Ryan

derifter: The extra money in your check happens because employers stop withholding as much money from paychecks, so your employer may have started a week or two early.

22 Debbie

Watch out for these situations:

Anyone who holds more than one job. You will get paid the Making Work Pay Credit twice, up to $400 ($800 for a joint filer) from your first employer and up to $400 ($800 for a joint filer) from your second employer.

Joint filers whose spouses work. Each spouse will end up being paid the credit for married couples by each of their employers.

There’s a twist, too. Because of the way the withholding tables were set up, each working spouse may be paid up to $600 this year — instead of up to the $800, Mezistrano said.

In other words, the husband would receive $600 at his job and the wife $600 at her job, for a total of $1,200. Since they’re only entitled to $800 total as a couple, that means they would have to pay $400 back to the IRS — or see their refund reduced by that amount.

Anyone who started receiving their credit at the end of Febuary or anytime in March. The withholding tables are structured so that payments starting in April will add up to $400 for single filers and $800 for joint filers by year end. If payments start sooner than that a tax filer may actually receive a bit more than he’s due by Dec. 31. (tax return decreased due to extra payment or payments)

Conversely, if your employer doesn’t start your payments until the end of April or in May — there’s no penalty if an employer doesn’t meet the April 1 deadline — you may end up getting a little less of a credit than you’re entitled to, in which case you can claim the rest when you file your 2009 tax return. (tax return increased due to under payment)

23 Brande

Ok,
So when we prepare our 2009 tax return, we will get a credit of $400 for single and $800 for married?
If it is up to that amount how do they know what the credit would be? I prepare my return on H&R Block.com so will it automatically figure the credit for me?
I think that it will be ridiculous if we will get less back on our taxes because we got it this year. Why would they think that is helpful if we have to pay it back in the long run? Thanks

24 Maria

It is not helpful. That is just it. When the stimulus package was being put together, the Republicans wanted more to go to the people and wanted it to go to them in one lump some. But, it got knocked around, of course, and less got approved.

400 or 800 bucks will NOT stimulate the economy. My husband got his extra already about 34 bucks or something like that, every two weeks. If I wasn’t looking for it specifically in his check, we NEVER would have noticed it. He makes overtime, so that is mainly why, but this will just go towards what we already purchase. The essentials like milk, food, etc., etc.

As far as declaring it, we will need to “declare” it as income even if you do it on a tax software. Since I am self employed, I heard this “credit” will be applied when I do my taxes next year and “added” or “taken off” as appropriate depening on my earnings.

It is a smokescreen, in my opinion. Obama never came out, nor did anyone else for that matter, and said it needs to be declared. I found the info on the IRS website and that is the first I heard of it.

Or, guess we can just say, Oh, didn’t know that was income! Just like Obama’s white house officials. Ha, ha, ha.

25 Lori

What date will this paycheck increase stop/expire?

26 Ryan

Lori: This is intended to begin on April, 1, 2009 and last through the end of 2009. However, the extra money comes from less payroll tax withholding and it is done by the company that pays you. Some companies have elected to start this early, and some may start later, or not at all and you acn claim it next year on your taxes. It is not the same for everyone.

27 Carmelo Junior

Obama-Geithner stimulus is nothing than a re election scam!! Bush gave us 2,000 dollars last year in a month. I bought a new computer and a HDTV, what the hell are we going to do with 10 dollars more a month for a year??????????

28 Carmelo Junior

According to AOL money and finance, the long awaited stimulus payment Obama intended to give to working US citizens is nothing more than a 10 to 15 bucks pay increase per month for a year. So if you thought you was going to receive a check for 400 to 800 dollars by this summer you can forget about that. You can forget about home improvements, buying a new computer, a new HDTV or a little get away. 10 dollars a months don’t do sh*t for anybody! President Bush gave us 800 to 2000 dollars in just a month last year. Obama-Geithner’s stimulus is just a re election scam!!!!

29 Sylvia

Will the “Making Work Pay credit” be considered income and will it be taxable?

30 Ryan

Sylvia: No, it is not considered income or taxable.

31 Carmelo Junior

A 3% pay increase is not stimulus for the economy. That goes mainly for the increase of expenses such as gasoline, thus, things will ramain as they are. But if you give 2,000 dollars to 45 million people, at least half of that money will go to the market (i.g. Walmart, Home depot, etc.)

32 Carmelo Junior

The pay increase will expire when the 400 hundred dollars are out. Possible by next midterm elections!

33 Gina

Carmelo: If this is not to your satisfactory, you can always donate to the folks that just lost their jobs, homes, etc, etc, etc. The Red Cross, CHKD, USO and other organizations would love to receive any money sent to them. I am grateful that I still have my job, my home, my car. It saddens me that others are less unfortunate.

Why not just send it back to the President saying “thanks, but NO thanks. Love, Carmelo. Remember, Bush is no longer in the White House, so just accept it. It is now the Obama Administration.

JUST GIVE IT BACK!!!!

34 Brande

Do we have to include it on our taxes next year so that we get a smaller refund? I thought we got an $400 or $800 credit to offset the money.

35 Brande

You people are never happy. I think I would take the extra money no matter how we get it. Between my husband and I we get about $100 more a month. Every little bit helps. Just think if you didn’t have it then you would not have that extra gallon of milk, or bread or gas in the car. Be thankful. Stop complaining.

36 Susie

I’m happy for the little extra but angry that I will probably get less back next year on my taxes. My tax refund check is usually what stimulates MY economy, and now it will be less so. Pretty stupid. Plus, next year it will be like getting a pay cut, since I’ll be used to $20 or so more in my checks. And you know your medical insurance costs increase every year. It’s like every year I make less money… this will make it worse! Hopefully by next year the economy improves. I knew this was coming, with the outrageous housing, fuel, and car prices. Greedy people want everything they can’t have but feel they should have… Stop buying McMansions and SUV’s and live within your means.

37 marion

if my check were more , than go figure because this cat just didn’t notice.. i rather wait at the mail box waiting for my check, is it worth trying to save 11 dollars each pay period are u serious…. nevertheless god bless u obama for trying…. im with you all the way because even though this is a pain i know trying to get this country correct can’t be easy……so i will try to be kool …………..

38 Nakia

How will the Making Work Pay Credit affect my tax return next year? With this new credit, no taxes are being withheld from my twice monthly paychecks. Does that mean I will have to pay in next year?

39 Ryan

Nakia: You should have some taxes withheld from your paycheck. If you do not have taxes withheld, then you need to pay estimated taxes.

40 Bearhandz

I realize it’s not a lot of money, but every bit counts for those of us pinching pennies. So what do you do if your employer doesn’t adjust your paychecks to include the stimulus?

41 Ryan

Bearhandz: Adjusting the paychecks is optional for the employers, so I am not sure there is anything you can do about it.

42 Carmelo Junior

The economy is not going to get better with a 20 dollrs a month reelection scam. See? People don’t even notice they are getting this fiasco. Millions were waiting for a 400-800 dollars check in the mail to spend it this summer. They get a 20 dollars pay increase for a year instead.

43 Tracey

no stimulus payment for self employed wow, why where we not figured in that bill.
we pay taxes as well. welfare and social security does not, but they reap sum small reward. hmmmm. tax break @ the end of the year if so, how much!!!!!! do we recieve a letter in the mail stating it.

44 Ryan

Tracey, the tax break will be the same for self-employed workers as it is for W-2 workers. The only difference is that self-employed people pay estimated taxes and salaried or hourly workers usually have their taxes taken out for them. In this case the taxes that salaried and hourly workers receive will have a little less taxes taken out. I’m not sure how that will work for self-employed workers, but you can contact an accountant who may be able to help you out to determine if you can withhold slightly less on your estimated taxes.

45 Stephanie

I am geting more on my check and i am scared i will have to pay taxes at the end of the year

46 Ryan

This is the result of a change in the tax code and you will not have to pay more taxes based on the additional income you receive.

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