Paying taxes is painful… but reading about them shouldn’t be.
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It’s Fix the Tax Code Friday!
Next week, the revised tax tables for the Making Work Pay Credit go into effect. Last year, after stimulus checks were mailed out, taxpayers overwhelmingly supported a second stimulus package. Now, taxpayers don’t seem so sure. With the second stimulus package in place, with money in the pockets of most taxpayers next week, today’s Fix the Tax Code Friday question is:
Will the Making Work Pay Credit make a difference in the economy?
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If it seems too good to be true, it probably is.
Keep that adage in mind this tax season. There are a number of scams floating about which purport to get you more cash, faster. You should keep in mind that the government doesn’t use “middle men” to get you a refund faster or to increase the amount of money that you might be entitled to. All of those ads on sites like Facebook and others with wads of cash and Obama’s picture on them? Despite what they claim, they are not associated with any government-mandated stimulus plan. My advice: stay away from them.
If you don’t believe me, consider this warning from the FTC:
Web sites may advertise that they can help you get money from the stimulus fund. Many use deceptive names or images of President Obama and Vice President Biden to suggest they are legitimate. They’re not. Don’t fall for it. If you do, you’ll get scammed.
If you’ve already been affected, you can file a complaint in English or Spanish by calling 1-877-FTC-HELP (1-877-382-4357) or filing a complaint online. For more information, visit the FTC web site.
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President Obama has issued a target date for the adjusted withholding to begin as part of the stimulus package: April 1.
Obama mentioned the date in his weekly radio address, saying:
I’m pleased to announce that this morning the Treasury Department began directing employers to reduce the amount of taxes withheld from paychecks, meaning that by April 1st, a typical family will begin taking home at least $65 more every month.
The highly touted Making Work Pay Credit was part of Obama’s original campaign promises and was made law as part of the American Recovery and Reinvestment Act of 2009. The credit will provide up to $400 per individual worker and $800 per working married couple. The credit will be administered through cuts in withholding at the employer level. There are income restrictions, phase outs and eligibility requirements which apply.
Specifics of how the plan will work for the self-employed and lower income families that might not have enough withholding to receive the full credit have not, to my knowledge, been made public. It’s widely believed that those taxpayers will be able to apply for the credit, which is refundable, come tax time (next year, people, next year!). I would agree that seems like the most logical solution.
So, come April, check your paychecks. You’ll likely see a few more dollars. But don’t check your mailboxes: no stimulus checks for working families this go round.
I’ll post more details as they are made available. For more information about the credit and other stimulus package tax breaks, check out my prior article on the stimulus bill.
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I’m not going to issue a complete report on the stimulus plan until the ink on the signature page is dry (Obama plans to sign the final version of the bill on Monday). But for now, here are some fun stat facts about the bill:
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