Are you enjoying your whopping $10 a week from Obama's "Making Work Pay" tax credit? Well enjoy it while you can, because the government is more than likely going to re-seize it in the long run. This is because new IRS withholding tables could cause millions of taxpayers to receive more money than they are "entitled" to under the credit. For some, this will mean a smaller-than-expected tax refund. For others who calculate their withholding differently, you could end up owing the government, come next April.
Here are some prime examples of what some people may be facing.
-- 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.
-- A single college student with a part-time job making $10,000 would get a $400 boost in pay. However, if that student is claimed as a dependent on a parent's tax return, she doesn't qualify for the credit and would have to repay it when she files next year.
And when it comes to Social Security and veterans, there are a whole heap of issues there too. But don't you worry. Tax cheat Timothy Geithner says that he is "exploring ways to mitigate that effect."
That should make you feel much, much better.