In April 2009, the Making Work Pay tax credit gave all wage earners a small increase in their paychecks by way of reduced federal withholding. Now it’s time to look at how the credit will affect your 2010 tax return.
Most Americans received exactly the amount of credit they were entitled to. But the amount some taxpayers received was too large. Since they got the credit through reduced federal withholding, this may have resulted in a slight underpayment of tax. The Treasury Department estimates this could lead to more than 15 million people owing additional taxes, and having to pay more when they file their returns.
To find out if you may be one of those individuals, take a few minutes now to look at your 2010 pay stubs. It’s easy to figure out if you received too large a credit and easier still to make adjustments. But you had better act quickly, before the year ends.