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Tax credit gets snagged on IRS withholding tables

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posted on May, 2 2009 @ 11:11 PM
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As part of the massive economic recovery package instituted three months ago, Barack Obama unveiled the “Making Work Pay” tax credit. Limited to those who earn less than $95,000 a year(or couples who earn less than $190,000), the program will return 6.2% of a person’s earned income. All tax credits max out at either $400 for individuals or $800 for married couples.

The tax credit comes to most people in the form of a small increase on their paychecks beginning April 1, and that small increase should be sustained for the fiscal years 2009 and 2010. Obama has touted the tax credit as one of the big achievements of his first 100 days in office, boasting that 95 percent of working families will qualify in 2009 and 2010.

But a substantial portion of Americans reveling in their $400 tax bonus are going to get an unhappy surprise next April, when the government asks for some of the money back. The IRS recently re-issued an updated version of their tax withholding tables for employers to calculate how much to withhold from employee’s paychecks. The only problem: there are serious flaws that allow some taxpayers to collect more than the maximum tax credit, which will have to be repaid next year.

One scenario made possible by the new withholding tables is overwhelmingly common. A taxpayer working two jobs and making less than $75,000 a year will get two $400 dollar tax credits, one from each employer. The government will take the $400 out of next year’s tax refund. A similar common scenario: if both spouses work and have a combined income of more than $13,000, each spouse gets a $600 tax credit. There are 33 million married couples which have both spouses working.

“The new tax tables will simply mean smaller-than-expected tax refunds next year,” IRS spokesman Terry Lemons told Associated Press. But if someone who inadvertently received $800 instead of $400 calculates their taxes to minimize their tax refund, there is a likelihood of a tax bill next April. Tom Ochsenschlager, vice president of taxation for the American Institute of Certified Public Accountants, told AP, “They need to get the Goodyear blimp out there on this.”

A withholding calculator on the IRS website is aimed at taxpayers and scenarios that will require the government to recover mistaken credit.

rawstory.com...

This is just some of the establishment propaganda "lower taxes doesn't help the economy." Liberals have labeled it a Republican point of view and then argued that we need more taxes, and, look at where it's got us. Now we're going to get less on our tax returns. This is all the more reason to abolish the IRS. I'm getting tired of this junk.




posted on May, 3 2009 @ 01:37 AM
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Yep, all it means is a worker gets to keep more of his money, her, to be PC, in the paycheck, This does not reduce the income tax. It just lets someone keep more of their pay, and next year, they will just not get a big of a return from taxes overpaid on withholding. It's all smoke and mirrors, folks. And the biggest budget saving from the government is from projecting Iraq war spending to continue at an ever increasing level through 2019. And so we will not be there until then at the levels we currently maintain. So, voila! A reduction in spending! Drink the Victory Gin folks. Overseas Contigency Operations. Man-Made Disasters, H1N1, not manbirdflu, face the screen, bend over and exercise. You are not compliant! Above all else, don't have sex in the woods with a black-haired beauty who is ecstatic in her support of Big Brother. Muuuuuuuuaaaaaaaaaaahaahahhhahahahaah.



posted on May, 3 2009 @ 06:44 PM
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reply to post by kyred
 


Hahahaha


Good use of NLP and double think there! Now you have me convinced! It's for my own good!!


Seriously, are we going to fall for this a second time?



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