According to the AP, Millions of Americans may owe taxes next year on the money they receive this year as part of President Obama’s “Making Work Pay” tax credit.
This is due to the fact that it is not a tax cut, but the result of a modification to the tax withholding tables issued by the IRS. In essence, workers are having less money taken out of their paychecks each pay period. The result is that some may not be withholding enough to pay their Federal tax obligation for the year.
At risk of owing tax are:
“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.”
People who fall into any of the above groups may want to set aside more money for tax season or adjust their withholding again to have that money taken back out. It is an ironic result since the “Making Work Pay” tax credit is meant to spur increased consumer spending.
Read more here for greater detail and a link to the IRS withholding calculator.
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