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AP Finds ‘Tax Cuts’ Aren’t All They Seem

From a suddenly roused from sleep Associated Press:

Internal Revenue Service Commissioner Douglas Shulman testifies on Capitol Hill in Washington, Wednesday, April 1, 2009.

INSIDE WASHINGTON: Taxpayers to get rude surprise

By Stephen Ohlemacher, Associated Press Writer – Thu Apr 30

WASHINGTON – 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.

The Internal Revenue Service acknowledges problems with the withholding tables but has done little to warn average taxpayers

Obama has touted the tax credit as one of the big achievements of his first 100 days in office, boasting that 95 percent of working families will qualify in 2009 and 2010.

The credit pays workers 6.2 percent of their earned income, up to a maximum of $400 for individuals and $800 for married couples who file jointly. Individuals making more $95,000 and couples making more than $190,000 are ineligible.

The tax credit was designed to help boost the economy by getting more money to consumers in their regular paychecks. Employers were required to start using the new withholding tables by April 1.

The tables, however, don’t take into account several common categories of taxpayers, experts said.

For example:

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…

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…

What is going on at the Associated Press?

This is the second report in as many days which seems to fly in the face of the claims of Mr. Obama.

Of course it is information most of us had figured out long ago.

But that the AP is reporting it at all is quite amazing.

(Thanks to Curvyred for the heads up.)

This article was posted by Steve on Friday, May 1st, 2009. Comments are currently closed.

12 Responses to “AP Finds ‘Tax Cuts’ Aren’t All They Seem”

  1. pdsand says:

    I did have my withholding worked out to the nickel last year and the first part of this year, but once they started this nonsense I went switch mine and my wife’s to Single and 0, because like everything else government does, I knew they were going to screw this up.

    • oki2 says:

      Me and the wife did exactly the same thing. My HR department went so far as to warn people about this too.

  2. proreason says:

    Thank goodness the government rarely makes mistakes like this.

    Oh there was that little thing with loans to deadbeats that has eliminated $12 trillion in wealth from the country, and there was that little thing with the bailout that has thrown 6 million people out of work.

    And then there is this.

    But that’s it.

    Now we can move on to become a land of milk and honey under the benevolent umbrella of our good-intentioned liberal masters.

  3. CIV says:

    What is going on at the Associated Press?

    The AP is going to end up getting kicked off BO’s plane and blacklisted at press conferences if it doesn’t watch out.

  4. Liberals Demise says:

    Black Entertainment Television (BET) wants to know how this will affect the black unemployed population and what is in it for them.
    White Entertainment Television (WET) wants to kno…… wait…….. oh, never mind.

    • catie says:

      When I saw this little gem as one of the “top news” things on my yahoo page I started to laugh. I can just see old Moocher Peggy & Hustling Harriet being indignant if they got caught up in that. But never mind, neither probably pay anyway, just another in the line of 95% who are getting tax cuts-the 45% who don’t pay.

  5. Odie44 says:

    Ah.. and just 38 hours ago, Bambi lied (again) when he said “Saving 150k jobs (bs) and offered a tax cut to 95% of tax paying Americans

    The windfall for the IRS after 2009 filings are screwed up next year, in fees, penalties, etc will help pay for the ponzi scheme, aka “budget” he is shoving down our throats.

    Which was the point the whole time.

  6. DGA says:

    Since I am self employed, I didn’t pay as much attention to this as I normally would; so I didn’t realise that this is not actually a tax cut for normal working people, it’s only a withholding adjustment! Man, are there going to be some pissed off people come early next year when they get their zero interest govt. savings plan money, their ‘tax back’, and it’s nothing like it used to be, and they counted on it to buy something. This whole bad idea will have an inverse effect on the economy. The small amount that you get in your hand now is so small that it’s won’t be spent on anything that will make a difference in increased tax revenues for the govt., while the large amount normally spent after the first of the year will, it often gets used for large ticket items that do bring increased revenues. Dumb, dumb idea.

  7. curvyred says:

    The sad thing is many people do not realize this is the case – and are just happy as clams thinking The One gave them some great “relief”

    • Liberals Demise says:

      Everything about this jellyfish has no vertebrae and you never get something for nothing!!

      Here is a clue for ya’ll…..the 95% of people destined for no new taxes will be getting a NEW tax levied on them REAL soon! (across the board)
      COUNT ON IT!!

    • curvyred says:

      Yes visa vie:

      Carbon Cap and Trade Taxes

      Higher fuel prices.

      Higher costs of most goods.

      And the list will go on and on

  8. Squito says:

    Well, at least my lib co-workers can’t brag about these so-called tax cuts….

    (snort) And so the dollar is whittled closer and closer to the point of being toilet paper.

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