Tax Rebates and Seniors

Discussion in 'General Discussion' started by vytoland, May 3, 2009.

  1. vytoland

    vytoland New Member

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    OBAMA TAX BREAKS MAY TRIP UP SENIORS

    Donald Lambro (Contact)
    Washington Times
    Sunday, May 3, 2009


    Social Security beneficiaries received notices last month that they soon will be getting a $250 check courtesy of President Obama's economic recovery package, but the administration did not say that some recipients may have to give part of it back.

    The problem: Seniors who also work and qualify for Mr. Obama's $400 Making Work Pay middle-class tax cuts may find themselves forced to give back some or all of the Social Security bonus come tax-filing time in 2010.

    The result, some economists say, could be serious confusion for tax filers.

    "This is a compliance headache that borders on being a nightmare. It's going to be complicated to reconcile these payments," said American Enterprise Institute economist Kevin Hassett.

    The one-time payments that will be sent this month to millions of Social Security retirees and beneficiaries of other federal entitlement programs are part of a little-noticed provision in the $787 billion economic stimulus law approved by Congress in February.

    But recipients who are still working full or part time to supplement their income may also qualify for Mr. Obama's Making Work Pay tax cuts, targeting lower- to middle-income workers.

    In the murky world of tax policy, the answer seems to be that they can't fully benefit from both, and the "surplus" has to be sent back to the government.

    But there is little if any discussion of this in either the Internal Revenue Service's notices or the letter that went out to 50 million Social Security recipients last month.

    "No, it's not well-known. I have seen no publicity to tell people drawing Social Security that they are not eligible for both the Social Security payment and the Making Work Pay tax credit," said Roberton Williams, senior fellow at the Tax Policy Center in the Urban Institute and a former tax analyst for the Congressional Budget Office.

    "The only people who know this are those who carefully read the stimulus bill," said Mr. Williams, adding, "It's only 600 pages long."

    Congressional and IRS officials say taxpayers cannot double-dip into both programs. If you are getting extra Social Security money and benefit from a lower withholding in your paycheck, the two will have to be reconciled when you file your 2009 tax returns next year.

    "Beneficiaries who are working full time and collecting Social Security benefits will receive the one-time Social Security payment as well as the portion of the Making Work Pay tax credit for which they are eligible," said Matthew Beck, Democratic spokesman for the House Ways and Means Committee that wrote the tax provisions.

    "However, workers receiving the full MWP tax credit will not be allowed to retain the $250 payment. They will have to reconcile the payments when they file their taxes in 2010," Mr. Beck said.

    Mr. Williams explains it this way: "Say they are reducing your withholding for the last nine months of this year by $400 for a single worker. Now subtract the $250 from the $400, and you will get a $150 credit," he said. "Effectively, you do not get to keep the $250 if you are working enough to get the full $400 tax credit.

    "You can get up to $400 total between the Social Security payment and the Making Work Pay tax withholding, but it can't be more than that," he said.

    In an e-mail response to questions from The Washington Times, an IRS spokesman described all this in much softer language that suggests workers have some discretion over the payments.

    "Individuals receiving [Social Security] payments under the economic recovery provision may want to evaluate their expected tax liability for the year and consider whether they need to make estimated tax payments or adjust their withholding," the IRS official said.

    The Making Work Pay tax credit amounts to 6.2 percent of each worker's income — up to $800 in tax cuts for married couples filing jointly and up to $400 for single workers.

    "This certainly renders the 'Making Work Pay' label frustratingly ironic for working seniors. We should be giving seniors incentives to stay in the work force, not to leave it," said Chuck Blahous, former adviser to President George W. Bush on Social Security.
     
  2. ponycar17

    ponycar17 Active Member

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    Thanks for the post. :D I posted something similar but not specifically pertaining to Seniors a week ago. I had a retired former coworker tell me how my concern didn't pertain to him. I'm going to send him this article with a grin on my face. :D

    Obama's tax plan isn't meant to create stimulus but only meant to appease the ignorant. Something similar to this was tried back in the Clinton years. It meant some filers came into tax offices around the country and found that they owed thousands instead of receiving a refund. The measure caught filers by surprise who thought 'ol Bill was givin' 'em somethin'... I just despise Democrap politics and misleading tax policies!!!!!! :mad:
     

  3. bcj1755

    bcj1755 New Member

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    A wretched hive of scum and villiany
    I just despise Democraps, or Dumbocrats, or Spendocrats, or whatever you want to call the commie b*******!

    I"ve been telling everyone I can the truth about Barry's "tax cut."
     
  4. Trouble 45-70

    Trouble 45-70 New Member

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    What the large print givith, the fine print taketh away, thus sayith the government. Someone in govt. is going to get a nice bonus for coming up with this scam.
     
  5. ampaterry

    ampaterry *TFF Admin Staff Chaplain* Staff Member Supporting Member

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    Ohmygosh, I LOVE that -
    GOOD one!!
     
  6. walien

    walien Former Guest

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    "Thanks for the post. I posted something similar but not specifically pertaining to Seniors a week ago. I had a retired former coworker tell me how my concern didn't pertain to him. I'm going to send him this article with a grin on my face.

    Obama's tax plan isn't meant to create stimulus but only meant to appease the ignorant. Something similar to this was tried back in the Clinton years. It meant some filers came into tax offices around the country and found that they owed thousands instead of receiving a refund. The measure caught filers by surprise who thought 'ol Bill was givin' 'em somethin'... I just despise Democrap politics and misleading tax policies!!!!!! "

    He's doing the same thing that Bush was doing. He's borrowing money to give a 'tax break' even though we run insane deficits. So, the democrap politics is the same as the republocrap politics. The rationale is that when people are given a few more dollars on their paycheck spread out over time, they tend to spend a lot more of it on consumables. When given a chunk, they're more likely to throw the money on things like credit card debt and thus not stimulate consumer spending.

    It seems like this should have been communicated better. The people in question still get the benefit of one of those payments though.
     
  7. ponycar17

    ponycar17 Active Member

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    walien, I've argued against the Bush cuts as well in the past. I have mixed feelings on them overall. The Bush tax cuts did their part in reviving us quickly from the recession that began in 2000. The difference in the Bush cuts and the proposed Obama cuts is that the Bush cuts didn't pull tricks like the Obama cuts are pulling. Sure, the Bush cuts could be repealed and we'd all be in deep doodoo but the Obama cuts are setting us up to owe in 2010 from the onset. A family where both spouses work is going to see about $1600 total less taken out of their paychecks annually. Since the tax tables aren't being modified and since the tax credit for two working spouses is only $800, they'll owe $800 of that money back in 2010. They got an $800 interest-free loan from the government. It's an accounting trick that most people won't catch. It's just dirty...