Good response (political action). Don’t be a victim.
Generally, you want to owe some money when you pay taxes. That way, the government gets what they were owed with no interest-free loan to them.
This is what I always tell FReepers. The Founders fought for less.
This probably is not your employers decision. 0bama had the IRS change the withholding tables for last year. It was to put more money in peoples pockets to “stimulate” the economy. I spent a lot of time telling people I know to expect this. But most did not listen until it was too late. You might want to consider withholding even more than 10% now because the reductions in rates President Bush established expire. Not only will there be withholding shock, there will also be tax rate increases (timed to be felt after the 2010 election). In other words, if you were shocked when you paid this years taxes, just wait another shock is coming.
Highlights
Highlights of Report Number: 2010-41-002 to the Internal Revenue Service Commissioners for the Wage and Investment Division and Small Business/Self-Employed Division.
IMPACT ON TAXPAYERS
The Making Work Pay Credit is to be advanced to taxpayers through their wages by a decrease in Federal income tax withholding. This creates the vulnerability that some taxpayers may have their taxes underwithheld at the end of Tax Years 2009 and 2010. If taxpayers are advanced more of the Making Work Pay Credit than they are entitled to, they may ultimately owe taxes when filing their Tax Years 2009 and 2010 tax returns and may be assessed estimated tax penalties.
WHY TIGTA DID THE AUDIT
The Making Work Pay Credit, a provision of the American Recovery and Reinvestment Act of 2009, will apply to most taxpayers with earned income. The credit will be in effect for Tax Years 2009 and 2010. The Making Work Pay Credit was implemented using new income tax withholding tables issued by the Internal Revenue Service (IRS). Application of the tables could negatively affect a significant number of taxpayers. The overall objective of this review was to assess IRS efforts to implement the Making Work Pay Credit and to evaluate its impact on taxpayers.
WHAT TIGTA FOUND
Based on an analysis of Tax Year 2007 tax return data, TIGTA estimates that more than 15.4 million taxpayers could unexpectedly owe taxes for Tax Year 2009 as a result of the Making Work Pay Credit. TIGTA’s analysis of the new withholding tables and the amount of the credit that taxpayers are to receive identified taxpayers who would be advanced more of the credit than they were entitled to receive. The changes to the withholding tables do not take the following situations into consideration:
· Dependents who receive wages.
· 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 receive pension payments.
· Social Security recipients who receive wages.
More than 1.2 million taxpayers included in these groups may be subject to: 1) paying back some or all of the Making Work Pay Credit and 2) being assessed the estimated tax penalty or an increased estimated tax penalty as a direct result of the Making Work Pay Credit.
My husband got the $250 disabled veteran stimulus check last year. Schedule M must be filed to declare this money. The IRS deducted exactly $250 from our small refund this year. What crooks! I pity the poor elderly that must return their $250. The gov taketh away!
How does withholding less save the employer money?
If you get money back, that means you gave them even more than your exorbitant tax bill to hold all year.
One of these days I’m going to figure out how to claim my *entire* paycheck, and then grudgingly cut them a check at the end of the year.
Then I’ll get as many people as I can to do the same.
Gotta find someone with lots of money, or the ability to collect lots. It pretty expensive to run for office. Especially if you have to work for a living also.