14 News, The Tri-State's News and Weather Leader-Tax credit may affect your spring filing

Tax credit may affect your spring filing

By Laura Forbes - bio | email | Twitter
Posted by Sarah Harlan - email

(WFIE) - 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.

It was a part of President Obama's stimulus plan. The tax credit was $400 dollars for individuals, $800 for couples, but the Making Work Pay tax credit was spread out over months of paychecks.

So taxpayers may have noticed they had a little extra money, but may not have known why.

"Paychecks change a lot at the beginning of the year because of benefit changes, so it is possible they may not have thought much about the fact that their paycheck changed," Felicia Bowden with Liberty Tax Service said.

Tax preparer Felicia Bowden was concerned from the beginning that many taxpayers who usually get refunds may actually owe.

"When people don't get the refunds they were expecting, they're not happy, and they're not happy with me," Bowden said.

Now, a treasury department report said taxpayers may owe because the government was too generous, especially those taxpayers who have more than one job, are married and both spouses work, or receive social security benefits while also earning taxable wages.

"A lot of people rely on those refunds to pay back bills and rent and they're like 'What am I going to do?' It is a hard position to be in," Bowden said.

She said the best thing taxpayers can do is find out if they got the credit, and be prepared just in case.

"Add it up," Bowden said. "Look at prior tax returns and current pay stubs, and if it isn't clear, come in and we'll take a look."

She said they won't be able to give an exact amount of how much might be owed, but you can get an idea so you don't get shocked come tax season.

Bowden said the tax credit is a federal program so it shouldn't impact state returns. 

©2009 WFIE. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.