http://news.yahoo.com/s/ap/20091116/ap_on_bi_ge/us_tax_credit_pickle

WASHINGTON – More than 15 million taxpayers could unexpectedly owe taxes when they file their federal returns next spring because the government was too generous with their new Making Work Pay tax credit.

Taxpayers are at risk if they have more than one job, are married and both spouses work, or receive Social Security benefits while also earning taxable wages, according to a report Monday by the Treasury Department's inspector general for tax administration.

The tax credit, which is supposed to pay individuals up to $400 and couples up to $800, was President Barack Obama's signature tax break in the massive stimulus package enacted in February.

Most workers started receiving the credit through small increases in their paychecks in April. The tax credit was made available through new withholding tables issued by the Internal Revenue Service.

The withholding tables, however do not take into account taxpayers with multiple jobs or married couples in which both people work. They also don't take into account Social Security recipients with jobs that provided taxable income.

The Social Security Administration sent out $250 payments to more than 50 million retirees in the spring as part of the economic stimulus package. The payments were meant to provide a boost for people who didn't' qualify for the tax credit.

However, they went to many retirees who also received the credit. Those retirees will have the $250 payment deducted from their tax credit — but not until they file their tax returns next year, long after the money may have been spent.

"While implementing a credit through reduced withholding is an effective way to provide economic stimulus evenly throughout the year, it is difficult to account for everyone's circumstances," said J. Russell George, the Treasury inspector general for tax administration. "More than 10 percent of all taxpayers who file individual tax returns for 2009 could owe additional taxes."

The tax credit is also available for 2010. Russell said the problems will continue in 2010 if they are not resolved.

For many, the new tax tables will simply mean smaller-than-expected tax refunds next year. The average tax refund this year was about $3,000.

The IRS, in a response to the audit, advised taxpayers to check their withholding throughout the year to make sure they don't get hit with an unexpected tax bill.

"The withholding system must approximate the tax liability of tens of millions of Americans, and therefore, cannot be tailored precisely to fit every individual situation," Richard Byrd Jr., commissioner of the IRS' wage and investments division, wrote in the agency's response to the report.

What's great is I'm one of the people…as both Peanut and I work.

I guess I need to call my Accountant to make sure that things are on par…But I'm sure that we'll be one that's screwed.

Just like when we updated our house.  2007 taxes, there were breaks for doing things to up the efficiency of your house.  But, we did things like Insulation and wood stoves and the like in 2008. So I bring all the receipts with us…no go for 2008.  Now, in 2009, they are all back on the table…so we could have gotten the tax breaks if we waited a year.  Stupid tax credits!

Reason #1367 to support FairTax.

More than 10 percent of all taxpayers who file individual tax returns for 2009 could owe additional taxes.

I would think it would be way more than 10%.  I don't know a single married couple that holds down just one job between the two.

From our Accountant:

What you can do is have a pay stub from before the change in withholdings and the current withholdings, subtract the difference on each one individually and see if it comes to more than $400.00. If it does then you will get less of a refund than in prior years. If not then your refund should be in the same area if all other items remained stable for last year.