Rude surprise awaits taxpayers

Dark Knight said:

WASHINGTON – Millions of Americans enjoying their small windfall from President Barack Obama's "Making Work Pay" tax credit are in for an unpleasant surprise next spring.


The government is going to want some of that money back.


The tax credit is supposed to provide up to $400 to individuals and $800 to married couples as part of the massive economic recovery package enacted in February. Most workers started receiving the credit through small increases in their paychecks in the past month.


But new tax withholding tables issued by the IRS could cause millions of taxpayers to get hundreds of dollars more than they are entitled to under the credit, money that will have to be repaid at tax time.


At-risk taxpayers include a broad swath of the public: married couples in which both spouses work; workers with more than one job; retirees who have federal income taxes withheld from their pension payments and Social Security recipients with jobs that provide taxable income.


The Internal Revenue Service acknowledges problems with the withholding tables but has done little to warn average taxpayers.


Much more at link:



http://news.yahoo.com/s/ap/20090430/ap_on_go_ca_st_pe/us_tax_credit_pickle

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Marthatex said:

It's not a "bait and switch". Evidently the withholding table gives marrieds filing jointly and people with two jobs MORE than the tax credit they are entitled.

Sounds like it's a good idea to check the Witholding Calculator and make sure you are getting enough withheld from your check according to what you expect your tax liability to be this year.

You will still get the basic $400 or $800 tax credit for this year. ETA your tax credit would not have to be paid back, but your overpayment would be.

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Dark Knight said:

WASHINGTON – Millions of Americans enjoying their small windfall from President Barack Obama's "Making Work Pay" tax credit are in for an unpleasant surprise next spring.


The government is going to want some of that money back.


The tax credit is supposed to provide up to $400 to individuals and $800 to married couples as part of the massive economic recovery package enacted in February. Most workers started receiving the credit through small increases in their paychecks in the past month.


But new tax withholding tables issued by the IRS could cause millions of taxpayers to get hundreds of dollars more than they are entitled to under the credit, money that will have to be repaid at tax time.


At-risk taxpayers include a broad swath of the public: married couples in which both spouses work; workers with more than one job; retirees who have federal income taxes withheld from their pension payments and Social Security recipients with jobs that provide taxable income.


The Internal Revenue Service acknowledges problems with the withholding tables but has done little to warn average taxpayers.


Much more at link:



http://news.yahoo.com/s/ap/20090430/ap_on_go_ca_st_pe/us_tax_credit_pickle

Click to expand...

Dark Knight said:

I agree it probably wasn't bait and switch, but as the article said, they need to do a better job telling people to check their witholding to make sure they don't end up paying next year. That's why I posted the story, so people can start checking in on that before it's too late. Hopefully word will get around better. I certainly didn't know this.

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Marthatex said:

Of course; I wasn't questioning your posting this, just the "bait and switch" comments.

People do need to check their withholding amounts.

It's far better to take home too much and owe at the end of the year, than let the govt. keep your money and then get a no-interest refund from them.

(married couples - if you're taking home a hundred-a-month more than you were, and didn't get a raise, then that might be too much. $800 divided by 12 would be $66 a month less withholding, the correct amount)

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