Prepare To Pay Back The Tax Credit
And you thought the government was not out to screw you. According to a research report released by the Treasury Department's Inspector General for Tax Administration, over 15 million people may own $250 (and in same cases more than $400) on the tax "credit" received earlier in the year, purely as a function of how the tax break was set up by the IRS. The payment will come as either a smaller tax refund or larger tax bill. As a reminder, Obama's tax break earlier in 2009 (first of many) provided individuals up to $400 and couples up to $800 in one-time benefits. It turns out that money may now have to be repaid. And as the credit impacted 95% of all wage earners, the number of people impacted is estimated at about 15.4 million. But at least it got these 15.4 million soon to be angry taxpayers to consumer a little more than they otherwise would in Q2. And now, it is time for another "one-time" jolt to the system.
The breakdown of those impact is as follows:
- More than 6.3 million pensioners
- More than 1.6 million working dependents
- More than 2.5 million single taxpayers
- More than 4.1 million taxpayers filing jointly
- More than 687,000 Social Security recipients
- More than 87,000 taxpayers filing returns with ITINs
As the report discloses:
To determine the extent to which such taxpayers might be negatively affected7 by the new withholding tables, we developed computer programs to identify taxpayers in the previously discussed situations in TY 2007 and who either owed taxes with their returns and would have owed more taxes, or had small refunds but would have owed had the new withholding tables been in effect. Figure 1 shows that more than 15.4 million taxpayers, or 10.4 percent (15,473,463/149,494,988) of all taxpayers who filed, could be negatively affected.
With the tax implications of various benefit and tax subsidy programs finally being calculated properly, the US population should not be too surprised if comparable adverse outcomes develop out of Cash For Clunkers and all other middle-class "benefiting" programs.