Posted on 05/03/2009 11:08:13 AM PDT by NavyCanDo
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.
The Internal Revenue Service acknowledges problems with the withholding tables but has done little to warn average taxpayers.
"They need to get the Goodyear blimp out there on this," said Tom Ochsenschlager, vice president of taxation for the American Institute of Certified Public Accountants.
(Excerpt) Read more at kirotv.com ...
Don't you just love sarcasm?
A “Making Work Pay” tax credit is a joke to begin with, but notice how it doesn’t include retired folks who pay taxes on their investments they need to live on.
1. He proposed not notifying affected individuals of the "problem", and
2. He figured out and provided to management just how much more in taxes can be collected on account of TAX CUT and TURBOTAX notifying users that they OWE IRS A PENALTY (plus the return of the improperly deducted amount at stake).
IRS management knows this as does the Chairmen of the several affected committees in Congress but they don't care!
We are going to get HOSED!
Expect massively bigger turnouts for the April 15, 2010 Tea Parties.
going to get hosed? We are hosed!
There’s a reason you don’t hear anyone in the government talking about the “Fair Tax”. Keep the people broke and you have control over them.
what do u mean “an adjustment in the withholding tables”? are the taxes less or more? I keep reading that the average tax payer is getting a tax break of approx. 13 dollars a week.
please back up your statement with an example.
Yes, that’s all it seems to be. I got a note from employer saying that I should look at the amount they withheld and that it would be less and that I should know it, since it might result in having to pay the difference at the end of the year. When I looked at the change in the withholding, I found that it was actually MORE than before. All it all, it’s all a make-work facade. Presumably, when the withholding is less, it would put another hundred dollars in one’s pocket that he’s have to pay back later. Since anyone can decide at any time how much to withhold, they whole thing seems truly ridiculous as an economic “stimulus” move. Anyone employed who has withholding is already smart enough to know this.
Say I got 400 back this year. Does this mean I have to pay it back next year, or just dont get it next year too? I dot know what is going on. (Also have bad cold)
Taxes generate a heck of alot more than interest.
There was no change down in tax rates.
However, there were several tax credits in the porkulus bill (text is here); based on one of these credits, the "Making Work Pay" tax credit, the Treasury has been directed to make a change to the tax withholding tables for the two years the credit is in effect, even though generally such withholding changes in the past have been based on rate changes, not on tax credits.
Here's the final text of the "Making Work Pay" tax credit:
SEC. 1001. MAKING WORK PAY CREDIT. (a) In General.--Subpart C of part IV of subchapter A of chapter 1 is amended by inserting after section 36 the following new section: ``SEC. 36A. MAKING WORK PAY CREDIT. ``(a) Allowance of Credit.--In the case of an eligible individual, there shall be allowed as a credit against the tax imposed [[Page 123 STAT. 310]] by this subtitle for the taxable year an amount equal to the lesser of-- ``(1) 6.2 percent of earned income of the taxpayer, or ``(2) $400 ($800 in the case of a joint return). ``(b) Limitation Based on Modified Adjusted Gross Income.-- ``(1) In general.--The amount allowable as a credit under subsection (a) (determined without regard to this paragraph and subsection (c)) for the taxable year shall be reduced (but not below zero) by 2 percent of so much of the taxpayer's modified adjusted gross income as exceeds $75,000 ($150,000 in the case of a joint return). ``(2) Modified adjusted gross income.--For purposes of subparagraph (A), the term `modified adjusted gross income' means the adjusted gross income of the taxpayer for the taxable year increased by any amount excluded from gross income under section 911, 931, or 933. ``(c) Reduction for Certain Other Payments.--The credit allowed under subsection (a) for any taxable year shall be reduced by the amount of any payments received by the taxpayer during such taxable year under section 2201, and any credit allowed to the taxpayer under section 2202, of the American Recovery and Reinvestment Tax Act of 2009. ``(d) Definitions and Special Rules.--For purposes of this section-- ``(1) Eligible individual.-- ``(A) In general.--The term `eligible individual' means any individual other than-- ``(i) any nonresident alien individual, ``(ii) any individual with respect to whom a deduction under section 151 is allowable to another taxpayer for a taxable year beginning in the calendar year in which the individual's taxable year begins, and ``(iii) an estate or trust. ``(B) Identification number requirement.--Such term shall not include any individual who does not include on the return of tax for the taxable year-- ``(i) such individual's social security account number, and ``(ii) in the case of a joint return, the social security account number of one of the taxpayers on such return. For purposes of the preceding sentence, the social security account number shall not include a TIN issued by the Internal Revenue Service. ``(2) Earned income.--The term `earned income' has the meaning given such term by section 32(c)(2), except that such term shall not include net earnings from self-employment which are not taken into account in computing taxable income. For purposes of the preceding sentence, any amount excluded from gross income by reason of section 112 shall be treated as earned income which is taken into account in computing taxable income for the taxable year. ``(e) Termination.--This section shall not apply to taxable years beginning after December 31, 2010.''. (b) Treatment <> of Possessions.-- (1) Payments to possessions.-- [[Page 123 STAT. 311]] (A) Mirror code possession.--The <> Secretary of the Treasury shall pay to each possession of the United States with a mirror code tax system amounts equal to the loss to that possession by reason of the amendments made by this section with respect to taxable years beginning in 2009 and 2010. Such amounts shall be determined by the Secretary of the Treasury based on information provided by the government of the respective possession. (B) Other possessions.--The <> Secretary of the Treasury shall pay to each possession of the United States which does not have a mirror code tax system amounts estimated by the Secretary of the Treasury as being equal to the aggregate benefits that would have been provided to residents of such possession by reason of the amendments made by this section for taxable years beginning in 2009 and 2010 if a mirror code tax system had been in effect in such possession. The preceding sentence shall not apply with respect to any possession of the United States unless such possession has a plan, which has been approved by the Secretary of the Treasury, under which such possession will promptly distribute such payments to the residents of such possession. (2) Coordination with credit allowed against united states income taxes.--No credit shall be allowed against United States income taxes for any taxable year under section 36A of the Internal Revenue Code of 1986 (as added by this section) to any person-- (A) to whom a credit is allowed against taxes imposed by the possession by reason of the amendments made by this section for such taxable year, or (B) who is eligible for a payment under a plan described in paragraph (1)(B) with respect to such taxable year. (3) Definitions and special rules.-- (A) Possession of the united states.--For purposes of this subsection, the term ``possession of the United States'' includes the Commonwealth of Puerto Rico and the Commonwealth of the Northern Mariana Islands. (B) Mirror code tax system.--For purposes of this subsection, the term ``mirror code tax system'' means, with respect to any possession of the United States, the income tax system of such possession if the income tax liability of the residents of such possession under such system is determined by reference to the income tax laws of the United States as if such possession were the United States. (C) Treatment of payments.--For purposes of section 1324(b)(2) of title 31, United States Code, the payments under this subsection shall be treated in the same manner as a refund due from the credit allowed under section 36A of the Internal Revenue Code of 1986 (as added by this section). (c) Refunds <> Disregarded in the Administration of Federal Programs and Federally Assisted Programs.--Any credit or refund allowed or made to any individual by reason of section 36A of the Internal Revenue Code of 1986 (as added by this section) or by reason of subsection (b) of this section shall not be taken into account as income and shall not be taken into account as resources for the month of receipt and the following 2 months, [[Page 123 STAT. 312]] for purposes of determining the eligibility of such individual or any other individual for benefits or assistance, or the amount or extent of benefits or assistance, under any Federal program or under any State or local program financed in whole or in part with Federal funds. (d) Authority Relating to Clerical Errors.--Section 6213(g)(2) is <> amended by striking ``and'' at the end of subparagraph (L)(ii), by striking the period at the end of subparagraph (M) and inserting ``, and'', and by adding at the end the following new subparagraph: ``(N) an omission of the reduction required under section 36A(c) with respect to the credit allowed under section 36A or an omission of the correct social security account number required under section 36A(d)(1)(B).''. (e) Conforming Amendments.-- (1) Section 6211(b)(4)(A) is amended by inserting ``36A,'' after ``36,''. (2) Section 1324(b)(2) of title 31, United States Code, is amended by inserting ``36A,'' after ``36,''. (3) The table of sections for subpart C of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 36 the following new item: ``Sec. 36A. Making work pay credit.''. (f) Effective <> Date.--This section, and the amendments made by this section, shall apply to taxable years beginning after December 31, 2008.
Boiled down, this tax credit comes to $400 for single filers and $800 for joint filers, assuming that they have more than $6,450 dollars or $12,900 of earned income respectively. This tax credit is only available for years 2009 and 2010.
I'm keeping track of the "extra" in my paycheck. Maybe I should just park it in some interest-bearing account against the day I'll be asked to hand it back in. Save the interest earned for myself, of course.
It may not be all that bad. By the the time to settle up with the IRS comes again next April the inflated US dollar may be worth so little that it won't hurt near as much to hand it over to the IRS reptilians as it would now.
I recently heard a very wealthy man who made his hundreds of millions trading primarily in the international money market say that he believes the US dollar will lose somewhere between 50% and 90% of it's current value within the next two years. According to him, that runaway inflation will be due to the Obmameister giving out trillions of electronic fiat dollars that will be created out of thin air by the Federal Reserve, which in 1913 was given the authority to print money whether or not the government holds any valuable commodity to back it up.
If he's right, and I admit I don't know enough about high level fiscal matters to even have an opinion, in today's electronic world those dollars would be electronic bits instead of paper bills but runaway inflation would devalue those ethereal dollars the same as paper dollars.
Personally I'm thinking gold bullion, but there is the possibility that Obameister will use the authority FDR was given in 1933 to again seize all privately owned gold. Numismatic gold was exempted from confiscation in that last gold seizure, but who knows what Obameister could get away with since he apparently believes his authority was divinely bestowed and therefore transcends the Constitutional bounds that were observed by previous presidents.
Let us try a freemarket tax. There is nothing fair about taxes when the citizen does not have the right to say no.
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