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Tax credit for families
Tax credit for families
Tim Sexton, 35, is the finance director for the Village of Lombard in Illinois. He is pictured here with his wife, Shane, and children Lenny and Amanda.
Question: "For the tax credit, is a married couple only eligible if they both work (dual-earner)? My wife is a stay-at-home mom, and I make more than the single limits but significantly less than the married limits. How much do I qualify for?" - Tim Sexton, Elk Grove Village, Ill.

Expert: Cindy Hockenberry, research coordinator, National Association of Tax Professionals

Answer: The amount of the credit is based on your filing status and the amount of your modified adjusted gross income. It does not matter that only one spouse has wages. Your maximum credit as a joint filer will be $800, which begins phasing out when your family's income surpasses $150,000.

It won't matter to the employer what your income or filing status is. If you elect to get this credit through a reduced holding, then the employer will do that. Then it will all come out in the end when the 2009 return is filed. If too much was withheld, you'll owe; if not enough was withheld, you'll get a refund.

This is confusing and there are many unanswered questions especially on this one provision. I don't think anyone will know for sure how it's going to work until IRS issues guidance.

NEXT: Homebuyer credit
Last updated February 24 2009: 6:58 AM ET
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