Consumers could end up owing after tax credit - WTVM.com-Columbus, GA News Weather & Sports

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Consumers could end up owing after tax credit

COLUMBUS, GA (WTVM) - First, consumers get a boost in the form of stimulus checks. A one time payment of hundreds of dollars.  This time, it's more of a trickle with the Making Work Pay Tax Credit.

"For working individuals, it's a credit that comes to you in the form of reduced withholdings by your employer," says Auburn University Director of the School of Accountancy Dr. Norman Godwin, who is also a Certified Public Accountant.

For most folks, it amounts to about $400 a year, or possibly $800 for those married filing jointly.

The credit, which stems from President Obama's Stimulus Package covers 2009 and 2010 should add about $8 to workers' paychecks, except for this year.

"This year, it will be an accelerated benefit, so it might be something like $11 to $13 per week,"says Godwin.

The catch, not everyone is getting the money.

In fact, Godwin says there are some cases where folks could ending up owing the government at the end of the year.

"If you are a working dependent, you are not eligible for this tax credit," explains Godwin.

For example, a teenager or college student who works, but is still claimed by his or her parents.

Godwin says if they end up taking advantage of the credit and they're not supposed to, "If your employer reduces the withholdings, you will end up having to pay that back," Godwin says.

Another scenario, someone with two jobs. Think of it this way, you can't double dip!

"If you work two jobs and you're concerned about the employers withholding too little from your paycheck and you owing at the end of the year, you just need to talk to one or both of your employers about changing your W-4," Godwin adds.

There are others who won't be eligible for the Making Work Pay tax credit at all.

The credit begins to phase out for singles with an adjusted gross income of $75,000 and for those married and filing jointly who make $150,000 or more.

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