Urgent: Check Your Withholdings

Your paycheck has probably been bigger this year because the government stimulus package cut the amount of tax withheld from people who were expected to get the new "Making Work Pay" tax credit. But there's a problem: According to the Treasury Inspector General for Tax Administration, more than 15 million taxpayers may unexpectedly end up owing taxes.

The idea was to get the stimulus out sooner (by workers taking home larger paychecks) rather than later (at tax refund time), but the new tables were applied too broadly.  Among the people who may be under-withheld:

  • Dependents who receive wages
  • Single taxpayers with more than one job.
  • Joint filers where one or both spouses have more than one job or both spouses work.
  • Individuals who file a return with an Individual Taxpayer Identification Number.
  • Taxpayers who receive pension payments.
  • Social Security recipients who receive wages

Obviously it's bad for anyone to be unexpectedly under-withheld.  It's especially bad for people who pay estimated taxes, as they may be so under-withheld as to have to pay a penalty on top of the extra tax.

If you fall into any of the categories above, you ought to take a few minutes to familiarize yourself with the details in the Inspector General's report, and get your withholdings adjusted while there's still time to catch up.  It's got complete details on the credit and the various categories of people who might be under-withheld.

Tagged: Taxes, taxes, withholding
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Guest's picture

It's hard enough to figure out your withholding right now. Good thing they threw this in for good measure.

It will be tough for those who this affected to catch up in...3-6 paychecks for most.

Guest's picture

I agree with the first comment. It's hard enough to calculate withholding in and of itself.

I will be royally pissed if I owe taxes come April 15th. Thank you for the information.

Guest's picture

Just another example of the "best laid plans" syndrome of the Obama administraion. You can add this one to the list containing the Cash for Clunkers program and the Homebuyers Credit.

Its a shame that these people will be penalized for something that was supposed to help them. Fortunately, after checking mine, it doesn't seem like it will affect me.

Guest's picture

I'm always afraid that I'll get my withholdings wrong anyway (because my income varies from year to year) so this kind of stuff doesn't help. When I got the extra amount in my check I didn't even want to mess with it, so I just went and had it immediately withheld again.

Guest's picture

It is really easy to see how much you need to withhold. Go to http://www.irs.gov/individuals/article/0,,id=96196,00.html and plug in numbers from paystubs.