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So much for our Making Work Pay tax credit

Posted by on Nov. 16, 2009 at 10:54 PM
  • 6 Replies

Tax break turns into money owed

reported by: Shawn Patrick      Date last updated: 11/16/2009 9:21:53 PM

DENVER - More than 15 million taxpayers could unexpectedly owe taxes when they file their federal returns next spring because the government was too generous with their new Making Work Pay tax credit.

The Treasury Department's inspector general for tax administration issued a report Monday saying that taxpayers are at risk if they have more than one job, are married and both spouses work, or receive Social Security benefits while also earning taxable wages.

The tax credit, which is supposed to pay individuals up to $400 and couples up to $800, was President Barack Obama's signature tax break in the massive stimulus package enacted in February. Most workers started receiving the credit through small increases in their paychecks in April.

"It'll be a real shock when they have a tax bill, even if it's insignificant," Sarah Knight, a CPA, said.

People like Will Daniels, who works two jobs, could be affected.

 Daniels is a Web site designer during the day and drives limos at night.

 "I like to do Web sites so I was planning on buying a new computer, or do something fun with it, go on a vacation, but it looks like I'll be spending some money instead," Daniels said.

 Knight says it's really going to impact people who count on seeing money coming back from the government.

 "Most of those people are not used to owing any money.  Most of those people are used to getting refunds," Knight said.

 Daniels echoed those sentiments.

 "I guess I'm used to getting back money at the end of the year. That's kind of like the whole thing, you work hard and you get back a little bit of money," Daniels said.

 "This certainly is going to hurt quite a few people," Knight said.

 To find out how much you could be paying back to the IRS, you can use a calculator on the IRS Web site.,,id=96196,00.html?portlet=7 


by on Nov. 16, 2009 at 10:54 PM
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by on Nov. 16, 2009 at 11:01 PM

Said our current situation we will OWE $912. WHAT THE HELL????!!!!!!!

by on Nov. 16, 2009 at 11:06 PM

When this first went into affect our payroll office told us to up our W-4 allowance because this appeared to be a short term 'loan' from the govt.  Many here did not believe it. 

by on Nov. 16, 2009 at 11:32 PM

You mean the government, and the President, messed up on stimulus money??? NOOOO... couldn't be....

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by on Nov. 16, 2009 at 11:35 PM

No biggie for us, we have not had a refund from the state or IRS for over 10 years. We still owe, so they can add it to our tab(s). LOL. Nothing in life is free, especially money!!!

of 6to 3 beautiful girls

by on Nov. 16, 2009 at 11:35 PM

We never saw an increase in pay from the tax credit and we do not make above the max allowed for a married couple. 

by on Nov. 17, 2009 at 12:52 AM

Due to this credit we stopped paying federal taxes in February.  Well at first I thought something was wrong with my husband's paycheck.  Then I found out it was due to the Work Pay tax credit.  I went to the IRS calculator and we're still going to get a refund because our tax liability is always $0 whether we have taxes taken out or not.  As of July when my DH deployed, we would have stopped paying federal taxes anyway.  Also it could be due to the fact that we currently claim 3 exemptions on his W-4 form, but will be claiming 4 exemptions when we file our taxes due to having our new baby.   So I guess in our situation, it won't affect us much.  I mean really we were only paying like $50 a month in federal taxes anyway because most of his pay is non-taxable anyway.  He's exempt from state tax.



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