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Tuesday, March 3, 2009

Make Work Pay - And Mysteriously Take Our Money


On February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009

*** has made changes to comply with the new Wage Withholding and Advanced Earned Income Credit (AEIC) payment tables to accommodate the new Making Work Pay credit. Modifications have been made to ***’s Payroll Systems to use these new tables beginning with payrolls processed on March 1, 2009. As a result, employees may see a decrease in their federal withholding and/or an increase in their AEIC (if applicable), beginning with the first payroll on or after March 1, 2009.


But for some, the new credit could result in an unexpected bill come filing time, because employers will be adjusting paycheck withholding amounts without knowing each worker's complete tax situation.

Here's how it works: The IRS on Saturday released new tax-withholding tables for employers to use when figuring workers' paychecks. The IRS asked companies to use the new withholding amounts by April 1.

"For most taxpayers, the additional credit will automatically start showing up in their paychecks this spring," said Doug Shulman, the IRS commissioner, in a press release.

"Since employers and payroll companies will handle this change, people typically won't need to take any additional action," he said. See the release on IRS site.

But if you file a joint return with your spouse, and you both work, you should carefully review your withholding, because it's highly likely both employers, without knowledge of what the other is doing, will adjust withholding such that both spouses receive up to $800, for a total credit of $1,600.

"It's conceivable that if both are married-filing-joint and their income is not otherwise going to cause a phase-out [of the credit], they could get the double Benefit," said Frank Keith, chief of communications for the IRS. "When they file their return, the actual credit they're entitled to is $800."

That means paying back up to $800 with your return, though Keith said the money paid out this year, and thus any tax bill later, likely would be slightly lower -- since the withholding adjustment starts close to midyear, the full credit won't be paid out in paychecks.

For some, what's effectively a loan from the government might be welcome. But others will find the big bill next year unwelcome. One way to prevent it: Adjust your withholding this year.

This is being implemented at my work and I'm just so wonderfully excited. Admittedly, I do not understand it as much as I need to... I even went out to find different withholding tables to try to help me understand. Yeah... that didn't help much. Arc explained it to me and it's still confusing even though he makes good sense.

Seems my only option is to change my deductions... aka adjust my withholding as mentioned above. Gee... that's so nice. I have to change my withholding deductions which will give me less money each month and all because Obama is giving me $13 a week that I didn't ask for nor want. This extra money will be counted as income, so I've been told, and thus... it will be taxed.

Does that sound helpful?

I'm still researching this and don't know when I will be able to really understand the legal documents found on irs.gov. Sigh...

And if I can't grasp the SIMPLE concept of taxes (ha-ha) then how on Earth did our wonderful Congress get through over 1000 pages in just a few short days; pages much more difficult than a SIMPLE tax form.


david drake said...

Barry's idea with the Gloom and Doom Act is to "bust" America, capitalism and the free market. He needs to do this so he can usher in Marxism. Great post Bug!

- - -

Sorry I haven't been visiting as much in the past. Been busy outside of the blogosphere. I do now understand your comment a few weeks ago at my blog when you mentioned there were "links" at the bottom of my post. I didn't know what you meant until I looked at one, single post on its own page and saw some automatic trackbacks/links to the post I'd written. Now I got-cha! I now know what you were referring to.

Oh, and on the below post, yeah, I though Jindal's speech was good. His "handlers" could use a lesson in how to better their media impression of him (his walk into it was...uh...it looked bad. Not that he walked bad, it was just too "casual"). And I don't know who told him what to wear, but the Repubs need some fashion tips. OTher than that, I though his speech was fine.

Bug said...

Obama is doing a lot of things right now that are just part of his plan to change America to suit his future vision; one where we're all sitting in our houses with Big Brother watching us. No thanks.

I've noticed your absense. I have to step away from time to time because I just get too depressed at all of this stuff or just too angry. There are some weekends where I have compiled a few things I want to write about and do a bunch at once... scheduling posts for the next week. Other times, I just decide it isn't worth the agrivation of getting a headache. :)

Thanks for the comments... nice to hear from you!

May we each take the moment necessary out of this day and any day we feel the need to remember those who have gone before us in defense of our freedoms. Without them... we would not be "here"... we would be in chains. ~Bug~