You Might Just Owe the IRS Some Cash
November 20, 2009 by tisha
g Digg plugin, Author : Yong Mook Kim Website : http://www.mkyong.com/blog/digg-digg-wordpress-plugin/ -->Back in February, President Barack Obama’s signature tax break, established to help consumer spending experienced some issues stemming from the initial set up. Taxpayers started receiving an increase in their paychecks beginning this past April. Married couples received up to $800 and single folks could receive back up to $400 in total. However, the system was not set up properly and more than 15 million taxpayers received $250 or more dollars than they should. The system was established through a new tax withholding table established by the Internal Revenue Service. However the tables did not take into consideration different types of taxpayers.
The tax credit was issued to all working taxpayers and those who receive benefits from Social Security. However, the system failed to consider those individuals who worked more than one job. Those double-employed were given back $400 at each job, totally $800. Married couples who both worked and make more than $13,000 were eligible for an $800 credit but with new withholding tables, they were also given a $600 increase, for a grand total of $1200.
Those who receiver social security benefits qualified for a $250 payment for their stimulus package. The problem was that many retired individuals also received the tax credit, meaning they received an additional $250 they were not entitled to receive. Retirees will have have the $250 amount deducted from their tax credit when they file their taxes for next year. Others who were overpaid will need to repay the government what they were paid in excess either by getting a smaller refund back or by paying a larger tax bill.
The tax measure was meant to spur consumer spending again amidst a falling economy. At the time, the money was an asset to many who were in need. Few failed to realize they had been overpaid. Now, the situation can be dire straights for some people who are still barely managing to survive day to day, but are expected to pay the money back to the government long after the money has been spent by a good majority of recipients.
Taxpayers can work to adjust their current withholding status by filing an updated W-4 with their employer. However, there is not much time left until the new year to benefit from the withholding changes. Those who are interested can visit the IRS website to calculate the amount of money that should be withheld to satisfy their tax balance.
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