Tuesday, March 3, 2009

EntrePoNukka Tip of the Week

This weeks tip comes from Kiplingers: How the Self-Employed Get Stimulus Money

Self-employed workers don’t have taxes withheld from their paychecks. How can they get their stimulus money?

Most taxpayers who file an individual return will receive $400 in stimulus money in 2009 and in 2010; married couples who file a joint return will receive $800 each year. Instead of receiving a check, employees will get the money through a reduction in the taxes that are withheld from their paychecks, adding about $45 a month to their take-home pay for the rest of the year.
But self-employed workers will need to adjust their quarterly estimated tax payments to benefit from the extra money this year. Single taxpayers can reduce the first quarterly payment due April 15 by $100 (25% of the $400 credit for 2009); married taxpayers can adjust their quarterly payment by $200 (25% of the $800). Then they’ll be able to reduce their three remaining payments for the year by that $100 or $200, too.

Then everyone -- both employees and self-employed people – will claim the credit when they file their 2009 tax returns by April 2010. At that point, the credit will reduce their tax liability in line with the reduced payments or withholding in 2009. Self-employed workers who didn’t adjust their quarterly payments throughout the year will get the extra money when they file their 2009 tax returns next year.

To qualify for the full $400 or $800 in stimulus money – whether you’re an employee or self-employed – your adjusted gross income for the year must be less than $75,000 if single or less than $150,000 if married filing a joint return. The amount gradually phases out for incomes above that level, and it disappears entirely if you’re single earning more than $95,000 or married earning more than $190,000.

For more information about the stimulus, see What You Need to Know About the Stimulus and How Will I Get My Stimulus Money? Also see the IRS’s stimulus page for frequently updated information about the stimulus payments.

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