To get more money into taxpayers’ hands, the American Recovery and Reinvestment Act included a new tax break, the Making Work Pay credit. Rather than being a separate rebate check, this credit started showing up in worker paychecks last April. By the end of 2009, eligible employees received an extra $400.

Some workers, however, got more than they should have. This happened, for example, when a worker had two jobs. The new withholding rates meant that employee got $400 at each job, or twice the allowable credit amount. Similarly, a husband and wife who each had jobs could have received excess credit.

This filing season, taxpayers will have to fill out the new Schedule M to reconcile any credit overages. You might want to fill out the form early to see just what kind of tax damage you might face.

If you did encounter a Making Work Pay problem in 2009, consider adjusting your withholding early in 2010.

Now about that 2010 payout. Even if you don’t make any W-4 changes, you’ll see more tax withheld from your paychecks than was taken out after the Making Work Pay credit went into effect last year. When the credit took effect, the full $400 amount was paid out over just the last nine months of the year. But with the credit being paid out over all 12 months of 2010, this year’s per-paycheck bump will be smaller.

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