Tuesday, November 17, 2009

Obama 'Tax Cut' Fiasco: up to 1.2 million taxpayers will be hit with underpayment penalties; 15.2 million could owe money to the IRS

How's that tax cut for '95% of working Americans' working out? Not too well, according to the Treasury Department.

15.4 million tax filers could owe money to the IRS thanks to Obama's 'tax cut' and 1.2 million may be hit with penalties for under withholding.

The taxpayers most vulnerable are those in two-earner couples... The Making Work Pay credit, created as part of the stimulus legislation enacted in February [was] paid in advance incrementally through their [2009] paychecks. And it's been automatic - meaning employers, based on what they know of a worker's income and using IRS withholding tables, automatically reduce the amount of taxes withheld from a worker's paycheck.

But an employer doesn't know the income of the worker's spouse or whether the worker is claiming a dependent who also is earning money, or whether the worker has income from other jobs.

Which means lots of folks have had too little tax withheld; they'll either owe money to the IRS or receive a reduced refund.

And as many as 1.2 million taxpayers will owe a penalty based upon a significant under-withholding.

"More than 1.2 million taxpayers included in these groups may be subject to: 1) paying back some or all of the Making Work Pay Credit and 2) being assessed the estimated tax penalty or an increased estimated tax penalty as a direct result of the Making Work Pay Credit," the inspector general's report said.

Isn't central planning great? I can't wait 'til Tom Daschle and 14 other unelected Health Commissioner bureaucrats get to decide whether Grandma gets that kidney she needs.

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