95% of Americans will get a tax break. Except for all the folks who will have to give theirs back. Via Tammy Bruce on Twitter comes this little nugget:
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.
At-risk taxpayers include a broad swath of the public: married couples in which both spouses work; workers with more than one job; retirees who have federal income taxes withheld from their pension payments and Social Security recipients with jobs that provide taxable income.
Say what you will about the Bush tax cuts, but at least they were real.
Yes, for folks who don’t qualify for the “cut”, it’s really just a decrease in withholding.
Back when the “rebate” was first announced, my wife somewhat jokingly asked me what we should do with our extra $66 per month.
I told her, “Save it up to mail back to the IRS next April.” Because that’s exactly the way it will work for us.
I think it would be very wise to sock this “extra” money away because it will be required of us next April. Smoke and mirrors, that’s all.
Do the Democrats provide anything that doesn’t involve some kind of slight of hand?
Tim,
I think Dems are pretty much straight-up honest with the pay backs they give to certain blocks who vote for them. Like unions, low income folks, super high income folks, radical feminists, big city dwellers, etc.
Of course, the contracts are mostly unspoken, so there is always some wiggle room. But their history of quid pro quo payback for votes is highly bankable.
A decrease in withholding is a cut in the amount of money owed, though a larger-than-needed decrease in withholding is still a cut but not as big as it may seem. Each actually is a cut, however. Unfortunately, the second one requires math skills, which is either trickery if you wish to see it that way or would be insulting to the American people’s intelligence if a change was made to alleviate the higher-than-necessary withholding. Or something like that.
I really can’t get too worked up either way about this one. I guess the checks handed out during the Bush Administration, which were tax cuts of some sort as well, couldn’t be afforded at this time of stimulus. Can’t really say how they were affordable then, either. And so now there was an attempt to let people spend their own money with an actual tax cut in the FICA withholding. Is this better? worse? the same? I really can’t see a huge difference.
The government is still spending too much money in comparison to what it brings in, is still borrowing at unsustainable levels, and is still unwilling to do much to face the challenges of tomorrow. (So was private industry and most consumers, but let’s continue to just focus on one group of idiots.) If I was to grade economic policies, the Obama Administration would get a D-plus while the GOP gets a D-minus at best. It certainly would be nice if the GOP could come up with a plan other than tax cuts and more tax cuts. Until one party or the other says “We want to slash spending here and here and here” with specifics and some votes behind it, we’ll remain screwed. And no, “wasteful spending” and “earmarks” is not specific. Right now, the only party that can do this is the Democrats, thanks largely to the GOP’s cognitive dissonance on the issue in the past. Whether either party can change into something financially responsible is doubtful, but I’d bet more money on the Democrats (and they’ll accept it much less-unwillingly.) But I don’t gamble that much.
When withholding is decreased but tax rates are not, the amount owed is increased, not cut.
There are others that don’t qualify for the *rebate* as well….anyone claimed as a dependent and non-resident aliends (like they file tax returns anyway).
Simple fix folks – just change your W-4. You can always calculate your pay by going to http://www.paycheckcity.com. Use the free paycheck calculators.
Single folks with dual incomes will also be underwithheld.
*Cash is cash and cash is taxable!*
A decrease in withholding is a cut in the amount of money owed
That’s a useful way to begin a post, for the benefit of those who haven’t learned the other signal for “scroll past this drivel”,
jon:
If I could but dare to hope he’s the only one who believes it…
Are you saying your Federal taxes actually increased? Read the story and do the math and show your work when you get a result other than a cut, and if you are a rich person I’ll pity you in an amount correlating to your level of suffering. Withholding was decreased as a way to implement this tax cut. But the amount of the decrease was often larger than the cut, leading to some mathematical confusion and an incorrect impression that it’s actually a tax increase. But it’s not. It’s an accounting game, but not a trick unless you are a mathematically-impaired idiot or a political hack. Sure, it would be nice if the decreased withholding was implemented in the amount of the cut, but that’s just one of the millions of ways the IRS is fucking stupid.