Some Tax Credits Will Have to be Paid Back
By Alan Stewart Carl | Related entries in TaxesMany American’s enjoying their Obama tax credit should not be spending every cent. Some of that money will have to be repaid to the IRS.
In what can only be describe as poor planning/poor execution, it’s far too likely that Americans will accidentally receive more tax relief than they’re owed:
–A single worker with two jobs making $20,000 a year at each job will get a $400 boost in take-home pay at each of them, for a total of $800. That worker, however, is eligible for a maximum credit of $400, so the remaining $400 will have to be paid back at tax time — either through a smaller refund or a payment to the IRS.
The IRS recognized there could be a similar problem for married couples if both spouses work, so it adjusted the withholding tables. The fix, however, was imperfect.
– A married couple with a combined income of $50,000 is eligible for an $800 credit. However, if both spouses work and make more than $13,000, the new withholding tables give them each a $600 boost — for a total of $1,200.
There were 33 million married couples in 2008 in which both spouses worked. That’s 55 percent of all married couples, according to the Census Bureau.
For many Americans, this flaw in the system will mean a smaller than usual refund. For others, it will mean writing a check next spring. In either case, Congress and the IRS should have been more aware of these potential problems and done something to prevent the possibility of taxpayers having to pay back portions of their credits.
This entry was posted on Friday, May 1st, 2009 and is filed under Taxes. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
May 1st, 2009 at 10:58 am
Another example of putting speed before considered thought. “But we’ve got to DO SOMETHING!!!!” Here’s an idea: think.
May 1st, 2009 at 11:41 am
A perfect example of “ready, fire, aim.”
May 1st, 2009 at 12:18 pm
Relax, with the mess left to Obama by the Bush and GOP crew no one will have a job anyway….
May 1st, 2009 at 2:47 pm
Teehee–Gerry, I’ve got a little clock on my desk that is waiting for the last “Blame Bush” comment to pass across the site–thanks for keeping it ticking! If all that Obama is is “better than Bush,” then we’re all screwed.
May 1st, 2009 at 3:15 pm
Exiled — That is going to need to be some type of geological clock.
Millenia from now our progeny will be able to walk into a Starbucks on Jupiter and find some frappichino google-boyz talking about the clear illegality of ethertapping and the horror of plasma-boarding Klingons and the need to recognize human-droid marriages. Inevitable one will show a poll of shifting intergalactic attitudes and say, “Well, Bush left us in such a mess 200 years ago…but times they are chang’in!”
I, for one, blame all of our problems on Alexander Hamilton…
May 1st, 2009 at 4:17 pm
Exiled Republicans have been beating on Carter for 30 years so (to the point people not even alive can repeat…)
I think there should be a fairness decade or two left in the mix. Certainly 100 days hasn’t broken us into any new territory.
May 1st, 2009 at 4:22 pm
My wife and I get “horned” by the tax system no matter what we do. I’m at the point now where it’s in one ear and right out the other – where do I mail the check? Give people a decent health care program, fix the roads, bridges, and ports – educate the children, bring home the troops (from everywhere), fund a larger and more dynamic State Department (to keep us out of wars), and chase down the “torture truth”. Just give us a few things to show for our tax dollars and a lot of people would stop complaining.