Millions Must Repay Part of Stimulus Tax Credit

Withholding errors mean 15.4M will get smaller refund or owe money
By Harry Kimball,  Newser Staff
Posted Nov 17, 2009 12:49 PM CST
Treasury checks waiting to be sent. This year, some who expected a break will actually have to pay more.   (AP Photo)
camera-icon View 1 more image

(Newser) – An IRS tax credit designed to lighten the load on recession-addled taxpayers won't work out as well as hoped for about 15.4 million Americans. Because certain minutiae of the new Making Work Pay credit weren’t factored in to withholding tables, more than 10% of taxpayers who file individual returns have been underpaying and will see a smaller refund than expected or actually owe money.

Among those affected, notes the Washington Post: workers with more than one job, Social Security recipients with jobs, and some married couples in which both spouses work. In fact, about 65,000 taxpayers will actually face penalties for underpaying, but the IRS says those fees will be waived.
(Read more tax credit stories.)