Donald Lambro

"However, workers receiving the full MWP tax credit will not be allowed to retain the $250 payment -- they will have to reconcile the payments when they file their taxes in 2010," Beck said.

Williams explained it this way: "Say they're reducing your withholding for the last nine months of this year by $400 for a single worker; now subtract the $250 from the $400, and you will get a $150 credit," he said. "Effectively, you do not get to keep the $250 if you are working enough to get the full $400 tax credit.

"You can get up to $400 total between the Social Security payment and the Making Work Pay tax withholding, but you can't get more than that," he said.

However, in an e-mail response to my questions, an IRS representative described this thorny tax-compliance thicket in more benign language that seemed to suggest that workers might have some discretion over how they treat the payment when in fact they don't.

"Individuals receiving (Social Security) payments under the economic-recovery provision may want to evaluate their expected tax liability for the year and consider whether they need to make estimated tax payments or adjust their withholding," the IRS official told me.

Obama's Making Work Pay tax credit amounts to 6.2 percent of each worker's income, giving them up to $800 in tax cuts for married couples filing jointly and up to $400 for individuals.

"The tax credit will mean $20.50 a week for joint filers and $10.25 a week for individuals," said Mark Robyn, a tax analyst at the nonpartisan Tax Foundation. "It's really not that impressive."

But many Americans will see no change in the tax withholding in their paychecks. The MWP tax cuts are phased out for married couples who file a joint return whose adjusted gross income (AGI) is between $150,000 and $190,000, and for single workers whose AGI is between $75,000 and $95,000.

Meantime, some analysts think there is something wrong about making senior citizens give back some or all of their one-time economic-recovery payment that is geared to helping people in the midst of a severe recession.

"This certainly renders the 'Making Work Pay' label frustratingly ironic for working seniors. We should be giving seniors incentives to stay in the workforce, not to leave it," said Chuck Blahous, a former adviser to President George W. Bush on Social Security policy.

Donald Lambro

Donald Lambro is chief political correspondent for The Washington Times.