|11-17-2009, 02:58 AM||#1|
Join Date: Jul 2001
Location: Hot Springs, Ouachitah
Tax Credit=Highter tax
Tax credit may mean higher tax bill
Updated 3h 14m ago | Comments 863 | Recommend 75 E-mail | Save | Print | Reprints & Permissions |
SURPRISE COME TAX TIME
Taxpayers who could receive a smaller-than-usual refund or owe money next year:
Single taxpayers with more than one job.
Joint filers where one or both spouses have more than one job or both spouses work.
Individuals who file a return with an Individual Taxpayer Identification Number.
Taxpayers who get pension payments.
Social Security recipients who receive wages.
Source: Treasury Inspector General for Tax Administration
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By Sandra Block, USA TODAY
More than 15 million taxpayers could end up owing the IRS money next spring, an unintended consequence of a tax credit designed to stimulate the economy, the Treasury Department's inspector general for tax administration said Monday.
The economic stimulus package enacted in February provided a tax credit of $400 for individuals and $800 for married couples. The IRS was instructed to adjust withholding tables so that workers would receive a small increase in their paychecks. Social Security beneficiaries got a one-time payment of $250.
But millions of taxpayers may have received a larger credit than they were entitled to because the IRS' revised withholding tables didn't take into account certain circumstances, such as workers with more than one job, the inspector general said. Other taxpayers at risk include dual-income couples, retirees who receive a pension and Social Security beneficiaries who have earned income.
READ: The Inspector General's report
MORE: The IRS's tax credit rules
As a result, 15.4 million taxpayers could unexpectedly owe money when they file their 2009 return, the report said.
The IRS said the inspector general's numbers are overstated. Most taxpayers who received an excess credit will see a lower refund instead of a tax bill, IRS spokeswoman Michelle Eldridge said. "For the vast majority of taxpayers, there's no impact."
Still, even a smaller-than-expected refund could be a problem for taxpayers who count on a check from the IRS every spring, said Melissa Labant, a tax technical manager for the American Institute of Certified Public Accountants. Some taxpayers rely on that money to pay their holiday credit card bills, she said. This year, the average tax refund was about $2,800.
The problems outlined in the inspector general's report highlight the difficulties the IRS faces whenever Congress decides to stimulate the economy by giving taxpayers a credit or rebate, said Mel Schwarz, tax partner with Grant Thornton.
"There's no perfect way to deliver the tax cut quickly when you're trying to apply it to such a broad range of individuals," he said.
Taxpayers who think they might have a problem and who don't want to wait until they owe or see a smaller refund can either change their withholding for the rest of the year or make an estimated tax payment by Jan. 15, Eldridge said.
Contributing: Matt Kelley
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Yahoo! Buzz Mixx Posted 18h 30m ago
Updated 3h 14m ago E-mail | Save | Print |
|11-17-2009, 07:28 AM||#4|
Ring of Famer
Join Date: Aug 2007
Pretty soon the government will want to be able to tell you what color socks you can wear on Mondays.
|11-17-2009, 07:40 AM||#5|
Hokie since 1993
Join Date: Apr 2001
Location: Denver, CO