Uncle Sam will want your tax cut backby Tim Manni
Or some of it, at least. An Associated Press article warns that the extra $40 or so that you’re now seeing in your paycheck under President Obama’s “Making Work Pay” tax credit may boost the amount of money you owe Uncle Sam:
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.
Why is this happening? According to the RedState blog:
As it happens the tax tables that the IRS use to compute tax bills does not take Obama’s gift into account. And the result is confusion as well as shock for untold numbers of Americans that will owe taxes at the end of the year when they didn’t think they would. This bill will come due if you aren’t careful calculating your withholdings.
How do you know whether you’ll be affected next April 15? Use this handy withholding calculator at the IRS website to find out. You may find it desireable to change the amount being withheld from your paycheck(s), or the difference might not be enough to worry about.