As with many such tax measures, there are income limitations. The credit begins to phase out at $75,000 in adjusted gross income for singles and at $150,000 for married couples, with full elimination at $95,000 for singles and $190,000 for couples.
This particular credit is refundable, which means taxpayers will receive it even if they owe little or nothing in federal income taxes. This will benefit low-income workers.
Self-employed individuals who are not subject to automatic tax withholding can benefit from the credit by adjusting their quarterly estimated tax payments.
More details on the Making Work Pay tax credit are available on the IRS Web site, www.irs.gov, and in IRS Publication 15-T.
A third provision within the American Recovery and Reinvestment Act exempts the first $2,400 of unemployment benefits from federal taxation. Normally, unemployment benefits are fully taxable.
For someone in the 15 percent tax bracket, this tax exemption amounts to a savings of $360. At this time, the exemption is in place for only 2009. Unemployment benefits received in 2008 remain fully taxable.
For a married couple, with both unemployed, the $2,400 exemption applies to each person separately, meaning the couple is exempt from taxation on the first $4,800 in benefits if both are out of work.
Unemployed workers can benefit immediately by adjusting their automatic tax withholdings or their quarterly estimated tax payments.
For information on the unemployment benefits tax exemption and the other measures outlined here, visit www.irs.gov and search for a page titled, IRS Information Related to the American Recovery and Reinvestment Act of 2009.
There's nothing there resembling a trillion-dollar payout for individual taxpayers, but it's still worth checking out.
This work is the opinion of the columnist and in no way reflects the opinion of ABC News.
David McPherson is founder and principal of Four Ponds Financial Planning in Falmouth, Mass. He previously worked as a financial writer and editor for The Providence Journal in Rhode Island. He is a member of the Garrett Planning Network, whose members provide financial advice to clients on an hourly, as-needed basis. Contact McPherson at firstname.lastname@example.org.