Thursday, November 19, 2009
Millions of taxpayers may take a hit next spring when they file their income tax returns. Earlier this year, as part of the government’s effort to stimulate the economy, lawmakers created the Making Work Pay tax credit that gave workers some extra money in their paychecks by adjusting their withholding. Congress took this route because it wanted to get money immediately into the hands of Americans so they could spend it, but without having to cut a separate check like other stimulus plans have done. Lawmakers worried that if the stimulus was given all at once, too many Americans might try to just squirrel it away.
Now, it turns out that many recipients of this plan will have to give the money back to Uncle Sam, because the Treasury Department says they didn’t qualify for it in the first place. The Treasury Inspector General for Tax Administration estimated in a new report that 15.4 million people, or about 10.4% of all taxpayers, who received the Making Work Pay tax credit will owe more than they normally would when they file their 2009 returns. Those taxpayers mostly likely affected are dependents who work, people with more than one job, two-income couples, taxpayers who receive pension payments, and Social Security recipients who have a job.
-Noel Brinkerhoff
Millions of Taxpayers Get Credit They Shouldn't (by Kathleen Pender, San Francisco Chronicle)
Millions of Taxpayers May Be Negatively Affected by the Reduced Withholding Associated With the Making Work Pay Credit (Treasury Inspector General for Tax Administration) (PDF)
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