Tax Alert!

The Associated Press reports that the tax credits enacted by the U. S. Congress and implemented on April 1, 2009 may have unwanted tax implications for workers when they file their 2009 tax returns. 95% of all American workers began to see increased take home amounts in their paychecks in April. This increase is a result of reduced taxes being withheld under President Obama’s economic stimulus plan.

The reduced withholding equals 6.2% up to an annual maximum of $400 for singles and $800 for married couples filing jointly.
However, new tax tables issued by the Internal Revenue Service and used by employers to implement the tax credits do not account for the following categories of workers:

- Married couples in which both spouses work

- Workers with more than one job

- Retirees who have federal income taxes withheld from their pension payments

- Social Security recipients who also hold jobs that provide taxable income

Workers in these circumstances may receive more than the maximums ($400 or $800). Consequently, these workers will be required to return the excess amounts when they file their tax returns for 2009. While the IRS is aware of this problem, it has taken no action to find a remedy and most workers are unaware that they face a potential unexpected increased tax bill.
Workers in the above circumstances can take action on their own by obtaining an IRS Form W4 and arranging to have more federal income tax withheld from their paychecks.