Tax Lawyer's Blog

The Associated Press reports that millions of taxpayers will have to repay some of their stimulus rebate back to the IRS come filing time in 2010:

The tax credit is supposed to provide up to $400 to individuals and $800 to married couples as part of the massive economic recovery package enacted in February. Most workers started receiving the credit through small increases in their paychecks in the past month.

But new tax withholding tables (PDF) issued by the IRS could cause millions of taxpayers to get hundreds of dollars more than they are entitled to under the credit, money that will have to be repaid at tax time.

At-risk taxpayers include a broad swath of the public: married couples in which both spouses work; workers with more than one job; retirees who have federal income taxes withheld from their pension payments and Social Security recipients with jobs that provide taxable income.

You should consult your tax preparer and have him or her make a quick calculation to see if you are affected by operation of the new withholding tables.

If you are, you can adjust your withholding to ensure that you won’t have to pay the IRS when you file your 2009 tax return on April 15, 2010.

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