Audit: Federal credit will cause trouble for taxpayers - WSFA.com Montgomery Alabama news.

Audit: Federal credit will cause trouble for taxpayers

 

Posted by Cody Holyoke - bio | email

 

MONTGOMERY, AL (WSFA) - Part of President Obama's stimulus plan--the 'Making Work Pay' tax credit--shaved small amounts of tax from the paychecks of millions of Americans.

 "A typical family will begin taking home at least 65 dollars more every month," Obama explained in a February address.

Those tax breaks are starting to add up. 

 An audit by the US Treasury department spotted a problem.  The tables put in place to regulate the withholding tax breaks--set at $400 per year for individuals and $800 for couples--didn't take into effect some social security recipients, married couples in which both people work, or people with multiple jobs.

"One [employer] is giving you a benefit for $400 credit, the other's giving you a benefit for $400 credit, but the government only wants you to have $400 [total]," explained Clint Freeman, tax director at Wilson Price CPAs in Montgomery.

Tax experts say the blunder means Uncle Sam will want some money back from millions of taxpayers.

"What's happening here is people have gotten more benefit from the credit than they're due," Freeman explained.

The IRS wouldn't speak with WSFA 12 News, but a representative sent talking points which state the tax break system "cannot be tailored precisely to fit every individual situation."

So, what can you do if you fit in this situation?  Not much, according to experts.

"The idea is you've got until April 15th to save that $400 to pay back," Freeman said.

The IRS set up an online withholding calculator. To see if this tax break affects you, click here.

  

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