| Tax Information |
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March 31, 2009,
Volume 55, No. 27
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Payroll Tax Notice: New Income Tax Withholding and Advance Earned Income Credit (EIC) Tables
New withholding tables may reduce the amount of income tax withheld from your wages. The new tables, prescribed by the Department of the Treasury, reflect the Making Work Pay credit and other changes resulting from the American Recovery and Reinvestment Act of 2009.
You do not have to submit a Form W-4, Employee’s Withholding Allowance Certificate, to get the automatic withholding change. If you do not want to have your withholding reduced (because, for example, you have more than one job or you are married and your combined income places you in a higher tax bracket), you may want to file a new Form W-4 with your employer. You may claim fewer withholding allowances on line 5 or request additional amounts to be withheld on line 6. For additional help, get IRS Publication 919, How Do I Adjust My Tax Withholding? Or visit the Internal Revenue Service’s website at www.irs.gov and use the “Withholding Calculator.”
Changes to the Federal tax tables will be reflected beginning with the March 27, 2009 weekly and the April 30, 2009 monthly pays.
—Payroll Tax & Individual Disbursement Services
Are You Eligible for a Tax Credit?
If you’re currently saving for retirement through Penn’s retirement plans or contributing to an Individual Retirement Account (IRA), you may be eligible for a tax credit. Up to $1,000 of your retirement savings could be returned as a tax credit if you meet certain income limits (see table below) and eligibility requirements.
You must be 18 years of age or older and not a full-time student in order to be eligible for the tax credit. In addition, if you’re claimed as a dependent on someone else’s tax return, you’re not eligible to receive the credit.
Saver’s Tax Credit for Calendar Year 2008
Modified Adjusted Gross Income |
Credit % |
Maximum Tax Credit* |
Married Filing Jointly |
Head of Household |
Single |
$0 - $32,000 |
$0 - $24,000 |
$0 - $16,000 |
50% |
$1,000 |
$32,000 - $34,500 |
$24,000 - $25,875 |
$16,000 - $17,250 |
20% |
$400 |
$34,500 - $53,000 |
$25,875 - $39,750 |
$17,250 - $26,500 |
10% |
$200 |
*The maximum contribution taken into account for an individual is $2,000.
Source: Internal Revenue Service
Example: Amy contributes $2,000 to her employer’s retirement plan for the 2008 calendar year. Because she’s single and her modified adjusted gross income is less than $16,000, she’s eligible for a $1,000 tax credit. The credit reduces the amount of taxes that she owes (or increases her tax refund) by $1,000 at tax-filing time.
For more information about the saver’s tax credit, visit the Internal Revenue Service’s website at www.irs.gov.
—Division of Human Resources
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