OVERVIEW
Note: The content of this video applies only to taxes prepared for 2009 and 2010. It is included here for reference only. Most Americans enjoyed an instant tax break last year thanks to the Making Work Pay Tax Credit. But some may face an unexpected tax bill in April.
Video transcript:
Hi, I'm Michael Alban with an alert from TurboTax.
Most Americans enjoyed an instant tax break last year thanks to the Making Work Pay Tax Credit. But some may face an unexpected tax bill in April.
The break took the form of lower withholding taxes, and amounted to $400 a year for single workers and $800 for two-income couples.
If you were eligible and paid withholding taxes in 2009, you already took home that benefit in fatter paychecks. If you're self-employed, the credit will apply when you file your 2009 return.
If you hold more than one job or your spouse works, be alert. In some instances, withholding adjustments bestowed two tax cuts when you're entitled to only one. Your tax refund could be reduced or you could even end up with a tax bill instead of a refund.
Unfortunately, you can't turn the clock back. But you can adjust how much your employer withholds in 2010, when the same tax cut applies.
Ask your employer for form W-4. Then adjust your withholding by altering the allowances you take or by entering an additional amount to withhold. This might reduce your paycheck in the short run, but it should make things easier at tax time.
Not sure how much to withhold? Grab your most recent paycheck and try Intuit's Paycheck Optimizer, at www.intuitlabs.com.
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