For 2009 and 2010, Congress gave workers a credit of 6.2 percent of their earned income, capped at $400 for single filers and $800 for joint filers. For single filers, the credit begins phase-out at $75,000 of Adjusted Gross Income and ends at $95,000. The phaseout range for couples is $150,000-$190,000. Employees will get the credit in advance via lower income tax withholding in each paycheck, not as a rebate check.
Self-employed folks can reduce their quarterly estimated payments to get an advance benefit from the credit. The exact amount of the payroll tax credit for the year will be calculated on the filers’ tax returns. Recipients of Social Security benefits, Railroad Retirement benefits, Supplemental Security Income or veteran disability pensions will get a one-time $250 check instead for 2009. Federal retirees who don’t receive any Social Security will also get a $250 check.
Starting in 2011, the partial credit for payroll taxes paid is no longer available.