President Obama’s signature tax break of up to $400 for individuals and up to $800 for couples is turning into a confusing mess for millions of taxpayers. What looked to some like free money in February amid the hoopla of Obama’s $787 billion “stimulus” bill was really a decrease in federal income tax withholdings for the 2009 and 2010 tax years. However, because of the speed in getting the bill passed, IRS withholding tables weren’t in place in April when workers started seeing less taxes withheld from their paychecks.
Come Tax Day, over 15.4 million taxpayers may actually owe the government. In some cases, people were given too much tax credit, so they are going to have to pay the extra money back. That’s not easy considering this money was made available to get the public spending to stimulate the economy. Now, at nearly the end of the year with holiday spending on people’s minds, they are to hold back spending to pay back the government for its error. This is not exactly what the economy needs.