Tax Payers in for Rude Surprise

Discussion in 'Off Topic' started by Zev0, May 12, 2009.

  1. Zev0

    Zev0 Member

    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.
    .......
    The tables, however, don't take into account several common categories of taxpayers, experts said.

    For example:

    _A single worker with two jobs making $20,000 a year at each job will get a $400 boost in take-home pay at each of them, for a total of $800. That worker, however, is eligible for a 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.

    - A married couple with a combined income of $50,000 is eligible for an $800 credit. However, if both spouses work and make more than $13,000, the new withholding tables give them each a $600 boost - for a total of $1,200.

    There were 33 million married couples in 2008 in which both spouses worked. That's 55 percent of all married couples, according to the Census Bureau.

    - A single college student with a part-time job making $10,000 would get a $400 boost in pay. However, if that student is claimed as a dependent on a parent's tax return, she doesn't qualify for the credit and would have to repay it when she files next year.

    Some retirees face even bigger headaches.

    The Social Security Administration is sending out $250 payments to more than 50 million retirees in May as part of the economic stimulus package. The payments will go to people who receive Social Security, Supplemental Security Income, railroad retirement benefits or veteran's disability benefits.

    The payments are meant to provide a boost for people who don't qualify for the tax credit. However, they will go to retirees even if they have earned income and receive the credit. Those retirees will have the $250 payment deducted from their tax credit - but not until they file their tax returns next year, long after the money may have been spent.

    Retirees who have federal income taxes withheld from pension benefits also are getting an income boost as a result of the new withholding tables. However, pension benefits are not earned income, so they don't qualify for the tax credit. That money will have to paid back next year when tax returns are filed.

    More than 20 million retirees and survivors receive payments from defined benefit pension plans, according to the Employee Benefit Research Institute. However, it is unclear how many have federal taxes withheld from their payments.
    .....

    So, basically, with slight of hand, they give you money now, to want it back later.
     
    Last edited by a moderator: Dec 15, 2015

  2. arceeguy

    arceeguy Active Member

    Remember - they aren't "giving" you anything! They are simply taking a little less. Told my employer not to adjust my witholding at all. Because of my schedule C income, I always end up owing them some money. The more you make, the more they take. Gotta pay my "fair share" and "step up and be patriotic". :ack2:
     
  3. bluegoatwoods

    bluegoatwoods Well-Known Member

    It would be nice if you quoted your source, zevo. I've noticed that some are more reliable than others.

    But it doesn't sound like a really big deal to me, anyway. They got the mechanics of the thing a bit wrong. They'll get it straightened out.
     
  4. Zev0

    Zev0 Member

  5. HoughMade

    HoughMade Guest

    Oh sure...they got essentially simple math wrong by accident....or they wanted people to think this whole thing was doing more than it really is....hmmm, I wonder which is more likely.
     
  6. bluegoatwoods

    bluegoatwoods Well-Known Member

    If I were betting on it, then I'd go with the simple mistake over the deliberate deception.

    Not that our government is too virtuous to deceive us. It's just that they usually reserve such tactics for their more evil deeds.
     
  7. arceeguy

    arceeguy Active Member

    Remember when Bush sent out $600 "stimulus" checks?

    Well, Michelle Obama quipped "You're getting $600 - what can you do with that? Not to be ungrateful or anything, but maybe it pays down a bill, but it doesn't pay down every bill every month," she said. "The short-term quick fix kinda stuff sounds good, and it may even feel good that first month when you get that check, and then you go out and you buy a pair of earrings."

    Obama is doing the same thing, except instead of sending checks out, he is giving a "tax credit", and having employers withold less. So basically, Michelle's hubby is doing the exact same thing that Bush did, except instead of getting a lump sum, it comes in in dribbles. So you get $13 bucks a week more. What does that mean? You can "super size" your happy Obama meal - until they ban it because of trans fats and calorie content.........

    Considering the first lady wears $600 sneakers to a frickin' food bank, I suspect the Obamas are just as "out of touch" with us as the people they criticize.

    She did have one thing right when she said:

    "The short-term quick fix kinda stuff sounds good, and it may even feel good........"

    This is exactly what Obama is doing. A lot of very expensive "quick fix" kinda stuff that will "feel good" for a while - until the bill comes due. That's when the stuff hits the fan. Oh Bah Mah, Oh Bah Mah!
     
  8. machiasmort

    machiasmort Active Member

    By the time any politician makes it to that level, they are out of touch! That's why we need a shake up. We need to vote a less wealthy party in! Kill the machines!

    Great post ZEVO- Anytime April 15th rolls arround, I always flinch while they shove in. Ya never know what to expect hence SURPISE! Great and accurate info tho!
     
  9. SimpleSimon

    SimpleSimon Active Member

    There is a very simple fix to the problems poised by the IRS playing games of this sort, in cahoots with the politicians.

    Change the mandatory tax filing day to the first Monday in November - remember, federal elections are the first Tuesday in November.
     
  10. kerf

    kerf Guest

    What does the tax policy, stimulus bill, cap and tax bill and the health care bill have in common? Unnecessarily large, unnecessarily complex and nobody knows what's in them. We were promised transparency in governance by The Fascist Obama, the definition of transparency is:

    2 a: free from pretense or deceit : frank b: easily detected or seen through : obvious c: readily understood d: characterized by visibility or accessibility of information especially concerning business practices

    I don't know about you but I believe I've been lied to.
     
Loading...