Too much tax credit? You’ll have to pay it back to the government
May 1, 2009
Many people have gotten a bit of an increase in their paycheck because of the president’s “Making Work Pay” tax credit.
The tax credit is supposed to supply up to an additional $400 a year for working single people and up to $800 for working spouses.
Some people have complained that the increase they get each paycheck is so small that it hardly matters. I figured extra money in the paycheck is extra money, even if it’s not a lot, so I’ll be grateful.
Except that now it’s turning out that many people are getting too much money through the tax credit and are going to end up owing the government money come next tax season.
Yahoo carried this story today about the various types of people who are getting too much extra money in their paychecks. From the sounds of the article, there are a lot of people who are going to have to pay back Uncle Sam next year.
Most people who received too much money this year will simply see a smaller refund check next year, but people who owe money will owe more still.
The IRS is aware of this, according to the Yahoo story, yet it’s not really an issue that’s been made public.
You can read IRS information about the tax credit at this page on the IRS website.
If you’re concerned that you’re receiving too much money through the tax credit, what can you do?
The Yahoo story says, “Check your federal withholding to make sure sufficient taxes are being taken out of your pay. If you are married and both spouses work, you might consider having taxes withheld at the higher rate for single filers. If you have multiple jobs, you might consider having extra taxes withheld by one of your employers. You can make that request with a Form W-4.”
The IRS page I linked to above includes calculators to help you.
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