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20 January 2010
Posted in
Tax Tips
Most were excited when we found out tax tables were changing….that meant more money in the paychecks!!
The IRS is now estimating 15.4 million taxpayers could unexpectedly owe taxes for 2009 as a result of the tax table changes. The changes to withholding tables do not take the following situations into consideration:
- Dependents who receive wages
- Single taxpayers with more than one job
- Joint filers where one or both spouses have more than one job OR both spouses work
- Individuals who file a return with an Individual Taxpayer Identification Number
- Taxpayers who receive pension payments
- Social Security recipients who receive wages.
Taxpayers in these groups may be subject to paying back some or all of the Making Work Pay Credit and some will be assessed the estimated tax penalty as a direct result of the MWPC.
So what is the IRS doing about this? The Treasury Inspector General for Tax Administration recommends the IRS increases media coverage and other forms of advertisement to target communications to taxpayers who may be adversely affected by under withholding and the IRS agreed. Kind of late, don’t you think?
Now, what does this mean for us and our clients? This means we & our clients will be receiving MANY phone calls from employees that owe money and believe their employer did not withhold the correct tax. I mean…how can they owe tax this year when they have never owed before? Because the tax tables changed!!
At this point, the only thing employers can tell their employees is to change their withholdings. So instead of Married 2, claim Married 0 and so on. If people are unhappy with the situation they now find themselves in, they may take their concerns to their local Representatives, Governor and Senate. This gives a whole new meaning to “Making Work Pay”….those of you that worked the whole year will now be paying for it!