Several million Americans may have a surprise coming to them on tax day this year. The Treasury Department finding, a bill designed to stimulate the economy, may stifle your wallet.
Everyone cheered in early Spring, when President Obama announced, single Americans would get $400 in tax breaks while couples would get $800. You have seen the money in each paycheck, because the government lowered the federal withholding. Now, turns out, for some groups, that money will cost them come tax time.
Remember all the way back to February and March, the economic stimulus plan was the talk all over Capitol Hill.
"Our plan will help restart the flow of credit," said U.S. Treasury Secretary Timothy Geithner on February 10.
"It's full of waste. We have no assurance it will create jobs or revive the economy. We're taking an enormous risk with other people's money," said Senator Mitch McConnell, (R) Senate Minority Leader.
The $780 billion plan was designed to save the economy. One of the huge parts of the plan was tax breaks for over 110 million Americans. But now those tax breaks may cost you come tax time.
A new study from the Treasury Departments reveals over 15 million people might owe come April 15 because of an over-calculation by the IRS.
Here are the three most affected groups:
First, single people with two jobs. The credit was given for each job for a total of $800. But a person is only eligible for up to $400 in relief.
Second, married couples, where both spouses work. Couples were eligible for up to an $800 tax break. However, if both people make more than $13,000, the new IRS withholding tables gave them a $1,200 tax break, $400 more than allowed.
Finally, retirees. Retirees were given a $250 lump sum payment. That was supposed to be for those who didn't qualify for the $400 tax break. But some 50 million seniors on Social Security got the payment, along with the $400 tax break.
For these 15 million Americans, it could mean less money in a refund or out of pocket payments that you never would have expected.
The IRS believes the Treasury Department is exaggerating how many people will be affected by this mix up. They also say, they are working on waivers to make sure anyone who might face an underpayment penalty because of the credit, will not have to pay.