Federal Tax decrease

[SMLCHNG]

So, anyone else who got paid today notice a reduced amount in your Federal Taxes?

Mine was about 1.7% less than last week.

So if they reducing the amount of our Federal taxes, are we going to owe less NEXT April 15th, or are the rates going to be the same as this year?

[phjrsaunt]

Is this the thing where we're supposed to start seeing an average of $13 more dollars in our checks?

[live2ski]

The tax brackets have not changed. Therefore, come April 15th 2010 you will not be a happy camper.

[SchoolGirlHeart]

The tax brackets have not changed. Therefore, come April 15th 2010 you will not be a happy camper.

So if I'm reading all this correctly, they're taking less out to make it LOOK like we're keeping more of our money but the tax brackets haven't changed, so come April 15, 2010, we're likely to owe money unless we change our W-4 and have more taken out? Lovely.....

[chippewa]

http://www.irs.gov/newsroom/article/0,, ... 21,00.html

More take home pay is supposed to result in a boost in spending to boost the economy. But that didn't seem to work last summer with the stimulus checks. I do like the idea of more of my money in my pocket, instead of the government holding it and giving it back in the form of a refund at the end of the tax year...with no interest. Even if I owe at the end of the year, at least the money in my saving account will have made a few dollars of interest.

And it seems I read somewhere here that paying taxes is voluntary, anyway.

[phjrsaunt]

So it still sounds like SGH is on the right track

[Feesh]

By the way, you have to pay taxes on that stimulus check. I used mine to pay my taxes from last year, so it really went to where it was supposed to go all along, right - THE GOVERNMENT!

[SharkOnLand]

By the way, you have to pay taxes on that stimulus check. I used mine to pay my taxes from last year, so it really went to where it was supposed to go all along, right - THE GOVERNMENT!

As far as I know, you DO have to claim it, but it isn't taxable. It was a refund on this years' taxes, but they gave it to consumers early to try and boost the economy.

As a matter of fact, I'm getting more money back this year, because the government didn't send all that I should have received in the stimulus check last June or whenever.

Edit: you may have to pay state income taxes on the money, depending on the state you live in....

[phjrsaunt]

So, anyone else who got paid today notice a reduced amount in your Federal Taxes?

Mine was about 1.7% less than last week.

So if they reducing the amount of our Federal taxes, are we going to owe less NEXT April 15th, or are the rates going to be the same as this year?

Hey Penny? Have you asked your company's Payroll department?

[Feesh]

By the way, you have to pay taxes on that stimulus check. I used mine to pay my taxes from last year, so it really went to where it was supposed to go all along, right - THE GOVERNMENT!

As far as I know, you DO have to claim it, but it isn't taxable. It was a refund on this years' taxes, but they gave it to consumers early to try and boost the economy.

As a matter of fact, I'm getting more money back this year, because the government didn't send all that I should have received in the stimulus check last June or whenever.

Edit: you may have to pay state income taxes on the money, depending on the state you live in....

I claimed it, which added it to my gross income. Thank you for my child being born or the gov't would have bent me over again.

[SMLCHNG]

Hey Penny? Have you asked your company's Payroll department?

Yes. And yes, it's the "Stimulus Package" was the answer.

[SchoolGirlHeart]

Hey Penny? Have you asked your company's Payroll department?

Yes. And yes, it's the "Stimulus Package" was the answer.

Oh, great.....

[phjrsaunt]

time to change the amount withheld then. 'course, I only have four more paychecks so maybe I'll be CRAZY and enjoy my extra money!! woohooo!!!

[z-man]

whole lot of bad information in this thread so far

Taxes have been reduced by the 'American Recovery and Reinvestment Act' signed by president Obama on Feb 17. As a result, witholding has been reduced to reflect the anticipated lower tax bills.

http://money.cnn.com/2009/02/21/news/ec ... /index.htm

"By Jeanne Sahadi, CNNMoney.com senior writer
Last Updated: February 21, 2009: 11:46 AM ET

TAX SAVINGS
How households may fare under the economic recovery plan.
Income Avg. tax savings Drop in tax bite
Under $19K $476 -95%
$19K-$38K $652 -22%
$38K-$66K $781 -9%
$66K-$112K $1,301 -7.5%
$112K-$161K $2,549 -8.3%
$161K-$227K $3,883 -8.3%
$227K-$603K $5,133 -5.7%
$2.8M plus $39,350 -1.4%


Source:The Tax Policy Center

NEW YORK (CNNMoney.com) -- Roughly 97% of American households could see tax savings as a result of the American Recovery and Reinvestment Act, according to a new analysis by a nonpartisan research group.

The Tax Policy Center crunched the numbers and concluded that the average savings would be $1,179. But how much a household actually gets depends on income, marital status and whether a filer has children. The savings range from a few hundred dollars to several thousand."

Admitedly, there will be offsetting increases to 'high income' (greater than $250K families) earners, but for now most will see a reduction in their federal income tax bill.

[Glorfindel7]

This must explain how I "got so much" on my last check (I thought it was just "overtime")

[bestseller92]

If you are in the tax bracket that will receive the $400/person - $800/couple tax credit, you will see a reduction in your withholding now, and this will be offset by the credit you claim on your 2010 tax return, so you won't owe more then.

[SMLCHNG]

http://www.irs.gov/newsroom/article/0,, ... 21,00.html

Thank you, Chip. We've been looking for this. Now I'm a bit less concerned.

IR-2009-13, Feb 21, 2009

WASHINGTON ― The Internal Revenue Service today released new withholding tables that will result in more take-home pay this spring for millions of American workers.

The new tables incorporate the new Making Work Pay credit, one of the key tax provisions included in the American Recovery and Reinvestment Act of 2009 that became law earlier this week.

“For most taxpayers, the additional credit will automatically start showing up in their paychecks this spring,” said IRS Commissioner Doug Shulman. “Since employers and payroll companies will handle this change, people typically won’t need to take any additional action. The IRS will continue working to implement this and other provisions of the new law as quickly as possible.”

The new withholding tables, along with other instructions related to the new tax law, will be incorporated in new Publication 15-T. This publication will be posted to this Web site next week and mailed to more than 9 million employers in mid-March. The IRS asks that employers start using these new tables as soon as possible but not later than April 1. Most workers will see a boost in their take-home pay soon thereafter.

Eligible workers will get the benefit of this change without any action on their part. This means that workers don’t need to fill out a new W-4 withholding form to get the Making Work Pay credit reflected in their take-home pay. A Form W-4 will not need to be submitted for the automatic withholding change. Individuals and couples with multiple jobs may want to submit revised Form W-4 forms to ensure enough withholding is held to cover the tax for the combined income. Publication 919 provides additional guidance for tax withholding.

Available for tax years 2009 and 2010, the Making Work Pay credit is 6.2 percent of a taxpayer’s earned income with a maximum credit of $800 for a married couple filing a joint return and $400 for other taxpayers, but it is phased out for higher income taxpayers. Most workers will qualify for the maximum credit. Because the credit is refundable (people can get it even if they owe no tax), most low-income workers will also qualify for the full credit.

Though all eligible taxpayers will need to claim the credit when they file their 2009 income tax return next year, the benefit will generally be spread out over the paychecks they receive beginning this spring and continue until the end of the year.

Many higher-income taxpayers will see little or no change in their take-home pay. That’s because the Making Work Pay credit is phased out for a married couple filing a joint return whose modified adjusted gross income (AGI) is between $150,000 and $190,000 and other taxpayers whose modified AGI is between $75,000 and $95,000.

Taxpayers will not get a separate, special check mailed to them from the IRS like last year’s economic stimulus payment.

Page Last Reviewed or Updated: March 04, 2009