Money for workers in the $787 billion federal economic stimulus package isn’t set up the same way it was in last year’s $700 billion measure.

Many people used their stimulus checks last year for big-ticket items or for battling debts, rather than everyday spending.

This time, the dollars are coming in the form of a tax break. The American Recovery and Reinvestment Act calls for fewer tax dollars being taken out of paychecks of 95 percent of Americans.

“The total cumulative effect of the measure makes it the largest tax cut for the middle class ever,” said 1st District Congressman Tim Walz.

The Making Work Pay credit starts April 1. The math works out to be on average of $13 a week more in your wallet if you have FICA taxes taken out of your paycheck. It lasts two years, so in January, the average amount will be $9.

Individuals are eligible for a credit of up to $400 a year and married couples filing jointly up to $800.

People wanting to do the math can take it straight from the IRS: “This tax credit will be calculated at a rate of 6.2 percent of earned income and will phase out for taxpayers with adjusted gross income in excess of $75,000, or $150,000 for married couples filing jointly.”

Employers should check the new IRS withholding tables.

If you don’t take taxes out of your paycheck, the IRS requires you to report the credit on your income tax return next year. If you don’t work and are on Social Security or veterans benefits, the government will cut you a $250 check.

Walz said the stimulus act extends the unemployment benefits effective already. The national unemployment rate is 7.9 percent, with District 1 about 6.9 percent.

“The average time to find a job is longer,” he said.

Other tax credits

There are several tax credits intended to boost consumer spending. They range from college to car sales and from home remodeling to home purchases. Most are in effect for two years.

“I think those are the ones that are going to affect people the most,” Walz said.

Here are some of them:

The act extends a measure that gives businesses a break on capital expenses, encouraging building projects. They can get a full credit of up to $250,000 and a partial credit of up to $800,000.

Small businesses — annual receipts of less than $15 million — that face net operating losses can spread them out over five years instead of two. These are often referred to as “carrybacks.”

The qualifying factors for the $1,000 refundable child credit is eased. You can begin to claim it at $3,000 and get the full amount after $6,667 in income.

The marriage penalty on the earned-income tax credit is gone. Married couples can have a higher combined income and still get the credit. And the act extends EITC to larger families. Families with three or more children can get the benefit on up to 45 percent of their earned income. The credit’s top climbs to $5,657 for filing jointly, three kids and earning up to $45,295.

Let’s talk cars. The act allows taxpayers on next year’s federal return to deduct state and local sales taxes from the purchase a new car, light truck or motorcycle up to $49,500 between Feb. 17 and the end of this year. The break phases out at the adjusted gross income of $125,000 or for joint filers $250,000.

In general, the act will not affect your 2008 federal income tax return. But it will affect your 2009 return, which you file next year. Here’s an exception:

First-time home buyers who buy this year are eligible for a maximum credit of $8,000 that — get this — can be claimed on the 2008 tax return, the one due April 15, 2009. People who buy this year but after the filing deadline and before Dec. 1 can claim it on next year’s taxes. The max credit for purchases in 2008 is $7,500. People who claim the credit and don’t wish to repay it must live in their homes for three years. The credit phases out if you earn more than $75,000 or $150,000 for joint filers.

If you remodel or buy appliances, be sure to ask about tax credits on energy-efficient products. There are several provisions, but you could qualify for a 30 percent tax credit, up to $1,500.

The Hope Scholarship, temporarily renamed the American Opportunity Tax Credit, is up to $2,500 per student per year for tuition and related expenses for the first four years of college. The previous level was $1,800. It phases out starting at $160,000 in earnings for couples, for singles $80,000.

What else?

There are other provisions in the American Recovery and Reinvestment Act, such as food stamps, Medicaid, law enforcement, job training, public education, infrastructure and the always-controversial alternative minimum tax.

Walz said dollars are being dispersed through existing federal funding mechanisms. The results of many aspects of the bill will depend on how state and federal agencies disperse them and on how the agencies interpret the act’s language. He said the accountability for how the money is being spent is at an unprecedented level.

He said last year’s bailouts and stimulus package suffered from lack of accountability and said fear of the measures not working crushed their effectiveness.

American Recovery and Reinvestment Act, he said, will be more transparent to the public and Congress will bring a hammer on anyone taking wrongful advantages.

“The public needs to see every penny wisely spent,” Walz said.

Jobs

Using direct and accumulative impacts, President Barack Obama’s administration estimates the stimulus package will create 3.5 million jobs in America over the next two years, with 90 percent in the private sector.

The White House issued a table that shows the estimated effect in each congressional district. It estimates 7,800 jobs over two years in District 1 of Minnesota and 7,400 jobs in the 4th District of Iowa. It estimates 66,000 jobs created in the next two years for all of Minnesota and 37,000 for Iowa.

“The Reinvestment Act would slow national unemployment rates by 2.1 percentage points,” Walz said.

He mentioned economists who said if left unchecked the unemployment rate would have hit 11 percent in 18 months but with the stimulus package is estimated to hit 8.9. It still climbs, Walz said, but not as drastic.