Last spring's tax break could come back to bite you

Last spring's tax break could come back to bite you

www.nhregister.com

Associated Press

WASHINGTON — More than 15 million taxpayers may owe the government $250 or more because of how the IRS last spring set up President Barack Obama’s tax break that was designed to help consumers spend the U.S. economy out of recession.

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So what is Geithner's excuse for this one? I guess if ever there was a good tax scam he would know how to make it happen. Just goes to show you one of two things about our current system - either they're too incompetent to set up a tax break the way it was intended or they're intentionally bilking the taxpayers. Which one is worse?

www.nhregister.com
(visit the link for the full news article)

Boy, they sure didn't think that one out very well!

Last spring’s tax break could come back to bite you

Most workers started receiving the credit through small increases in their paychecks in April. The tax credit was made available through new tax withholding tables issued by the Internal Revenue Service.
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For example, a worker with two jobs gets a $400 boost in pay at each job, for a total of $800. That worker, however, only is eligible for maximum credit of $400, so the remaining $400 will have to be paid back at tax time — either through a smaller refund or a payment to the IRS.

The IRS recognized there could be a similar problem for married couples if both spouses work, so it adjusted the withholding tables. The fix, however, was imperfect.
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Also, a single student with a part-time job gets a $400 boost in pay. However, if students are claimed as dependents on their parents’ tax returns, they don’t qualify for the credit and would have to repay it when they file their returns.

Sounds like the tax break was just poorly implemented/planned by the IRS to me!.

Originally posted by Keyhole


Sounds like the tax break was just poorly implemented/planned by the IRS to me!.

How do you figure this was a tax break? People might also be put into a higher tax bracket because of this. Remember all those checks that Bush authorized for tax payers to boost the economy? Rebate checks?

It's all just a loan on your own tax money! Talk about double dipping! It is also like making the people who do have jobs, pay more taxes to cover for those who don't.

This was not poorly planned. It was very well planned because if you think about it, there will be fewer people even filing this year who don't collect unemployment anymore, and who don't have a job.

The government is not as stupid as you would let them on to be!

Anyone with a Dual Income already knows about this. Anyone who is claimed as a Dependent already knows this. It is the same with *ANY* Federal or State Withholding when you have a Dual Income.

Each of your Employers uses Tax Tables based on Estimated Annual Gross Earnings. They cannot anticipate any additional earnings that you make at another job, or that your spouse makes at their job.

If there weren't exceptions to the rule then the I.R.S. would never require people to file both a W2/W4 and a 1040 every year and would just content themselves with what Employers withhold.

This Tax Break is not flawed. It is in the same boat as FICA, or any other Federal or State Withholding.

Either file a W2 that accurately reflects your Dual Income from two jobs or from a spouse or dependent, or file a W4, so that your deductions from your paychecks accurately reflects what should be withheld, rather than as a lump generic estimation based on Estimated Annual Gross Earnings from a Solitary Income.