15 Million Tax Payers Might Owe Unexpected Irs Taxes in 2009 and 2010: Are You One?

According to the Treasury Department’s inspector general for tax administration, if you have more than one job, receive Social Security benefits and earn taxable wages, and/or are married and both spouses work….then the government might have been too generous with their “Making Work Pay” tax credit.

This particular tax credit allowed married workers to see up to $800.00 and single workers to see up to $400.00 in small increases to their pay checks for 2009 through 2010 via new withholding tables by the IRS. Most workers started to notice this small increase on their paycheck back in April of 2009. The program will extend into 2010.

However, the credit did not and will not account for incidences where both spouses worked, taxpayers have multiple jobs, or Social Security recipients that also had a taxable income. Depending on your federal income taxes, those that fall into these categories could be stuck actually paying back the “extra tax credit” or just see the amount owed back deducted from their federal income tax return.

The credit also didn’t take into account Social Security recipients, railroad workers, etc.. that received the $250.00 dollar stimulus payment this year plus the “Making Work Pay” tax credit. The inspector general stated that the 250.00 payment was intended for those that wouldn’t get the tax credit.

Essentially, millions of citizens that have seen the tax credits on their paychecks are going to be paying back money that is probably long spent. The IRS has responded that the withholding system must “approximate tax liability” and can not be tailored to all Americans. They are advising taxpayers to check their with-holdings to make sure they don’t have to pay an unexpected tax bill.

Well, gee Mr. IRS, It’s a little late for taxpayers to be checking withholdings now… 7 months after the tax credit began and long after the money has been spent. I find it ironic that the tax filer makes a mistake and the IRS adds penalties on top of the money owed. Yet, the IRS makes a mistake and the taxpayer still has to suffer the penalty of paying back money that they had no way of knowing they wasn’t supposed to get.  Government agencies apparently have no accountability or responsibility for their mistakes.