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Paying back Barack's tax cut

post #1 of 21
5/1/09 at 7:54am
Thread Starter 
I guess my tax preparer was right when she said I would have to pay back the money at the end of the year.

http://finance.yahoo.com/news/INSIDE...1434.html?.v=1

Barack Obam is SUCH a phony.
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post #2 of 21
5/1/09 at 9:09am
Maybe I'm just not seeing it? My understanding is:
  • Everybody gets ~$400 in stimulus in the form of reduced withholding.
  • A few people, such as students who are claimed on their parents' taxes, are ineligible and have to repay the money.
  • Most people; however, are eligible and get to keep the money.
  • Some people, perhaps a fairly sizable minority, will get double or triple what they're supposed to and have to repay the excess 11.5 months from now.
  • The Treasury Department has acknowledged the problem and says it's looking into ways to fix it.

So it sounds like the worst case, assuming the government doesn't amend the law, is that some people will get a $400-800 interest-free loan instead of (or on top of) the stimulus. Compared to a bank loan, credit card, or a payday loan scam, that sounds like a pretty good deal.
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post #3 of 21
5/1/09 at 9:52am
Thread Starter 
Did you read the link? I guess the proof will be in the pudding, early next year when we file our tax returns for 2009.
My tax preparer actually told me to take the extra money I am getting from Barack's tax credit and pay it into Federal right now or I will have to pay all of it back. Mine is about $50.00 a month, so $600.00

Quote:
Originally Posted by Grogs View Post
Maybe I'm just not seeing it? My understanding is:
  • Everybody gets ~$400 in stimulus in the form of reduced withholding.
  • A few people, such as students who are claimed on their parents' taxes, are ineligible and have to repay the money.
  • Most people; however, are eligible and get to keep the money.
  • Some people, perhaps a fairly sizable minority, will get double or triple what they're supposed to and have to repay the excess 11.5 months from now.
  • The Treasury Department has acknowledged the problem and says it's looking into ways to fix it.

So it sounds like the worst case, assuming the government doesn't amend the law, is that some people will get a $400-800 interest-free loan instead of (or on top of) the stimulus. Compared to a bank loan, credit card, or a payday loan scam, that sounds like a pretty good deal.
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post #4 of 21
5/1/09 at 10:25am
Quote:
Originally Posted by ckblv View Post
Did you read the link? I guess the proof will be in the pudding, early next year when we file our tax returns for 2009.
My tax preparer actually told me to take the extra money I am getting from Barack's tax credit and pay it into Federal right now or I will have to pay all of it back. Mine is about $50.00 a month, so $600.00
I did read it and it doesn't seem to say people will to pay back the stimulus per se, but rather people getting the stimulus money twice or more will have to repay the excess amount. If it were me and I knew I had to actually repay the money (vice just getting a smaller refund) I would probably use it to pay off some high-interest debt (credit cards) or at least put it in a bank account and earn 1-2% on it before giving it back to the government. They get enough of my money interest free already.
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post #5 of 21
5/1/09 at 12:49pm
So the government is averaging out the withholding for married couples? Is that what this means?
Quote:
-- A married couple with a combined income of $50,000 is eligible for an $800 credit. However, if both spouses work and make more than $13,000, the new withholding tables give them each a $600 boost -- for a total of $1,200.
I don't get it. It seems that at best this was very poorly thought out.
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post #6 of 21
5/1/09 at 3:10pm
The whole idea that less than $8/week is somehow supposed to make me spend more money and stimulate the economy is the biggest load of horse puckey I've ever heard. Yet every chance he gets, Obama's out there touting that he's given a tax break to 95% of workers. Well, keep your damn $8/week, I sure haven't noticed the difference in my paychecks. Not that $32/month would do more than fill up my gas tank. And it certainly won't cover the increase in energy costs once that cap and trade system gets in place. What's the point?

Now they're telling me that I may have to pay back their pittance of a "tax break"? How is THAT supposed to stimulate the economy???

Talk about a dog and pony show!
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post #7 of 21
5/1/09 at 5:37pm
How is this any different than the $600 stimulus that Bush offered? Why were some people happy about that but complaining now that Obama does something?
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post #8 of 21
5/1/09 at 6:44pm
Quote:
Originally Posted by Momofmany View Post
How is this any different than the $600 stimulus that Bush offered? Why were some people happy about that but complaining now that Obama does something?
Hindsight being 20/20, the only real difference is that it was a lump sum vs. spread out into nothing. At the time, though, it was just an economic slowdown, and the $600 was supposed to be a shot in the arm to keep from going into a recession. Obviously that didn't happen, but there were a lot of variables that weren't known at the time (at least not by anyone besides the economic gurus like Laurie and Gary!). That was also supposed to be a one-time stimulus deal and not a teeny part of a HUGE spending bill and not brought up by Bush and his cronies as some huge "tax cut to the people" at every opportunity when it really didn't make a bit of a difference to the overall finances of anyone.
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post #9 of 21
5/1/09 at 7:12pm
Quote:
Originally Posted by valanhb View Post
That was also supposed to be a one-time stimulus deal and not a teeny part of a HUGE spending bill and not brought up by Bush and his cronies as some huge "tax cut to the people" at every opportunity when it really didn't make a bit of a difference to the overall finances of anyone.
That's why I don't see the difference. The Bush rebate didn't make a difference and the Obama tax relief isn't making a difference. So both plans are horse puckey then?
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post #10 of 21
5/1/09 at 7:53pm
Quote:
Originally Posted by Momofmany View Post
That's why I don't see the difference. The Bush rebate didn't make a difference and the Obama tax relief isn't making a difference. So both plans are horse puckey then?
Yes. At least that's the impression I get.
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post #11 of 21
5/1/09 at 8:55pm
Quote:
Originally Posted by Grogs View Post
I did read it and it doesn't seem to say people will to pay back the stimulus per se, but rather people getting the stimulus money twice or more will have to repay the excess amount.
Yes, that's how I read it too.

There are apparently certain situations, which they list in the article, that will see some people get more than the maximum stimulus amount that they are entitled too. Basically what the government will be doing at the end of the 2009 tax is a "grab back" of the excess that these people were given. So they aren't paying anything back that they were entitled to. They are just giving back the excess money that the government gave them.

What I would do is put the money I get in the bank so it earns interest. Then when and if they took money back from me via my tax return, at least I gained interest off of it first
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post #12 of 21
5/1/09 at 10:24pm
Quote:
Originally Posted by Momofmany View Post
That's why I don't see the difference. The Bush rebate didn't make a difference and the Obama tax relief isn't making a difference. So both plans are horse puckey then?
Quote:
Originally Posted by Essayons89 View Post
Yes. At least that's the impression I get.
Pretty much. Small amount in one lump sum or small amount spread out into even smaller amounts. The only difference to my personal finances was that with the Bush stimulus we were able to get a desperately needed appliance that we wouldn't have been able to for quite a while otherwise. The Obama "stimulus" isn't even noticeable, except for the contempt I feel every time I hear him or Igor...er, sorry, Robert Gibbs patting themselves on the back for that wonderful tax break he got for 95% of Americans. It didn't work when Bush did it, and at least he realized it (or his speech writers did) and didn't bring it up every time he talked about the economy from there on out.
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post #13 of 21
5/1/09 at 10:29pm
Ummm...I don't know the ins and outs but I was advised by my MIL (who is also a licensed tax preparer) to ask for more federal taxes be w/held because this could come back and kick us in the butt. Now, from what I understand, the stimulus check from last year shouldn't have to be claimed as earned income for most people. It depends on how you file...married...married but single...how many dependents, etc. This is different as in if you don't know exactly WHAT tax bracket you fall in to, you may end up owing for an extra few dollars a month.

I would adivse everyone to contact a tax consultant or advisor to verify all info.

I'm sorry, to me, this is like throwing out bread crumbs to pidgons and have them all eat the bread crumbs and looking for more. The poor birds will come back for more, but like any "group" we will just follow the leader, regarless of where he actually leads us.

Yeah...this was a GREAT idea....
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post #14 of 21
5/2/09 at 7:07am
Thread Starter 
Let's bump this thread back up early next year when we all start getting our taxes done and see how it all shakes out.


(Is that allowed?)
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post #15 of 21
5/2/09 at 3:46pm
Ever since George H. W. Bush did his stimulus where the government stopped withholding as much but the tax bill was still due in the end, I have been very wary of any of these manipulations. That year totally screwed up my tax preparation. Both the Bush and the Obama stimulus had little impact on me because I adjusted my withholding for both of them. I don't trust the whole concept.
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post #16 of 21
5/3/09 at 9:21am
Call me an idiot But I'm not entirely sure of who I would go to if I wanted more taken out of my paycheck- we owed money the year before and got back all of $9 this year from federal- mostly because my husband was working much less than full time this year, and they were barely taking anything out of his paychecks. The previous year I did an stipend paid internship in which no taxes were taken out. I was able to claim our tuition, otherwise we would have owed a couple thousand. I was wanting to have more taken out as a precaution. Do I just contact payroll for that, or do I have to go somewhere else?
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post #17 of 21
5/3/09 at 9:52am
Quote:
Originally Posted by esrgirl View Post
Call me an idiot But I'm not entirely sure of who I would go to if I wanted more taken out of my paycheck- we owed money the year before and got back all of $9 this year from federal- mostly because my husband was working much less than full time this year, and they were barely taking anything out of his paychecks. The previous year I did an stipend paid internship in which no taxes were taken out. I was able to claim our tuition, otherwise we would have owed a couple thousand. I was wanting to have more taken out as a precaution. Do I just contact payroll for that, or do I have to go somewhere else?
Contact your payroll department. The IRS has a withholding calculator to help you figure out how much to withhold. On a W4, you can change the number of allowances (fewer mean more money is withheld) and/or have an additional fixed amount withheld.

You can also make quarterly payments directly to the IRS. Here is an explanation of who needs to make them.
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post #18 of 21
5/3/09 at 1:24pm
From the linked article:

Quote:
But new tax withholding tables 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.
We had a discussion about this at work a while back. The only way you will have to pay it back is if you get more than you're supposed to. You can't rely on your employer to withhold the exact right amount, you have to actually do the math yourself and have payroll adjust if necessary. It's more of an issue, I think, when both spouses work and are both getting the tax credit.

What is unfortunate is that I doubt most people know this and will get a surprise when they do their taxes.
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post #19 of 21
5/3/09 at 3:45pm
Thanks Katachtig!
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post #20 of 21
5/3/09 at 6:35pm
Thread Starter 
Quote:
Originally Posted by Misty8723 View Post
From the linked article:



We had a discussion about this at work a while back. The only way you will have to pay it back is if you get more than you're supposed to. You can't rely on your employer to withhold the exact right amount, you have to actually do the math yourself and have payroll adjust if necessary. It's more of an issue, I think, when both spouses work and are both getting the tax credit.

What is unfortunate is that I doubt most people know this and will get a surprise when they do their taxes.
Just how does one figure out how much one is "supposed" to get. I am getting $50.00 a month more.

Heidi is right, they should have just given us an extra tax credit at tax time.
But noooooo, they have to complicate things.

Did I or did I now just hear Barack say, within the last week or so, that he wants to simplify the tax codes? Nice start Barack.
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post #21 of 21
5/9/09 at 3:13pm
My paychecks are about $25-30 more right now. I did the calculator, and according to that, we will still be getting a refund, but that is probably because DH doesn't work. I don't know how accurate that is though.
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