Millions will have to repay part of tax credit

[Craftsman]

Source: http://finance.yahoo.com/news/Millions-will-have-to-repay-apf-3724344310.html?x=0&sec=topStories&pos

WASHINGTON (AP) -- More than 15 million taxpayers could unexpectedly owe taxes when they file their federal returns next spring because the government was too generous with their new Making Work Pay tax credit.

Taxpayers are at risk if they have more than one job, are married and both spouses work, or receive Social Security benefits while also earning taxable wages, according to a report Monday by the Treasury Department's inspector general for tax administration.

The tax credit, which is supposed to pay individuals up to $400 and couples up to $800, was President Barack Obama's signature tax break in the massive stimulus package enacted in February.

Most workers started receiving the credit through small increases in their paychecks in April. The tax credit was made available through new withholding tables issued by the Internal Revenue Service.

Read more: http://finance.yahoo.com/news/Millions-will-have-to-repay-apf-3724344310.html?x=0&sec=topStories&pos

[no_hypocrisy]

1. Let me predict: The republicans will say that Obama raised the taxes on millions of working stiffs

at a time they can't afford any further expenses.

[sandnsea]

2. Can't be true

Obama didn't do anything to help working people. Just ask any DUer

[jus_the_facts]

4. It wasn't much help at all and now it will hurt plenty.. so he didn't do anything ..in reality. n/t

[sandnsea]

6. Oh I know, billions in tax cuts and assistance

and infrastructure projects, that's just nothing :eyes:

There's never a perfect withholding table, this is just more made up bullshit.

[sinkingfeeling]

3. My retirement administrator discovered that retirement income was not included in the

reduction back in May and incresed the withholding to correct. I lost something like $44/month. I work full time and also receive a monthly retirement check from IBM.

[JimWis]

5. As an accountant who does payroll work, we sort of figured that

out right away. Tax tables are never very accurate to what your taxes may end up being, especially for married couples. As an example, if you and your spouse both claim Married on your withholding, regardless of the number of exemptions, the table always assume one income. So that couples taxes would each go down $ 800 for the year, or $ 1,600 total. But the credit is only $ 800, or $ 400 each. Thus, they will be over withheld and pay the price at tax time. I made a point to sit down with employees to suggest that they may not want to follow the tax tables, and alot of them understood this and adjusted their withholding accordingly. This is not a new problem. Tax tables never assume two couples both working, or an individual with two jobs, etc. I am not surprised that many folks may have gotten more tax reduction than the $ 400 per person that was intended. For years I have asserted that the tax tables need revisions.

[prolesunited]

7. This is nothing new

When I had a full and part-time job (the good old days), they NEVER withheld enough from the PT job because they don't know what your overall income is, particularly if you don't have any deductions.

I wonder why they are making this sound like some new problem cooked up by Obama.

You really need to look at the tax tables and make sure you're on track. I didn't want to take a big hit, so I always had a little extra taken from my FT paycheck.

[starroute]

8. That's nothing compared to when George H.W. Bush did it on purpose

When Bush Sr. was trying to get reelected in 1992, he put through something that reduced everybody's withholding by about $25 a month. But there was no actual tax credit to go along with the reduction, so everyone was going to owe it back the following April. (I was handling payroll where I worked then and advised people to change their W-4's to maintain their existing withholding level so they wouldn't get stuck.)

Here's the announcement in Bush's 1992 SOTU. Notice the deliberately deceptive way he describes it -- as a voluntary way Americans who were being over-withheld could "choose" to reduce their withholding (which they could have done anyway) rather than an across-the-board change in the withholding tables that would result in most people owing money at the end of the year.

http://stateoftheunionaddress.org/category/george-hw-bush

January 28, 1992

Now to our troubles at home. They are not all economic, but the primary problem is our economy. There are some good signs. Inflation, that thief, is down, and interest rates are down. But unemployment is too high, some industries are in trouble and growth is not what it should be. Let me tell you right from the start and right from the heart: I know we’re in hard times, but I know something else: This will not stand. . . .

I have directed Cabinet departments and federal agencies to speed up pro-growth expenditures as quickly as possible. This should put an extra $10 billion into the economy in the next six months. And our new transportation bill provides more than $150 billion for construction and maintenance projects that are vital to our growth and well-being. That means jobs building roads, jobs building bridges and jobs building railways. And I have this evening directed the secretary of the Treasury to change the federal tax withholding tables. With this change, millions of Americans from whom the government withholds more than necessary can now choose to have the government withhold less from their paychecks. Something tells me a number of taxpayers may take us up on this one. This initiative could return about $25 billion back into the economy over the next 12 months, money people can use to help pay for clothing, college or a new car.

[Ava83]

10. I just logged on to post the same thing...

but for some reason I think that information will be mentioned with this story

[4_TN_TITANS]

9. the screwing of average people never ends.

I'm sure this will hit me and the wife somehow.