Millions may have to repay part of Obama tax credit

Lawyer News

For more than 15.4 million people, the Making Work Pay tax credit enacted as part of the $787-billion economic stimulus package could turn out to be a Making You Pay Back tax credit.

That's the finding of a government watchdog report out today about the credit, which provides as much as $400 for individuals and as much as $800 for joint filers. It is the signature tax cut that President Obama promised in his campaign and was delivered with much fanfare in February.

The problem: In order to maximize the credit's stimulative effect on the economy, withholding changes for taxpayers kicked in within days of Obama signing the legislation and taxpayers started seeing the changes in their paychecks in April. In essence, the credit was "advanced to taxpayers through their wages by a decrease in federal income tax withholding" for the 2009 and 2010 tax years, according to the report by the Treasury Department's Inspector General for Tax Administration.

http://latimesblogs.latimes.com/money_co/2009/11/millions-may-have-to-repay-part-of-obama-tax-credit.html

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