I got my retired military pay voucher yesterday; I’m getting more money each month because the amount of withholding dropped. Many Americans like me who are enjoying their small paycheck increase from President Barack Obama’s “Making Work Pay” tax credit are in for an unpleasant surprise next spring. The government is going to want some of that money back. The tax credit is supposed to provide up to $400 to individuals and $800 to married couples as part of the recovery package.br /But the new decrease in withholding will cause millions of us to get hundreds of dollars more than we are entitled to, money that will have to be repaid. At-risk folks include: married couples where both spouses work; workers with more than one job; retirees who have federal income taxes withheld from their pension payments and Social Security recipients with jobs that provide taxable income.br /Obama has touted the tax credit as one of the big achievements of his first 100 days in office, boasting that 95% of working families will qualify in 2009 amp; 2010. The credit pays workers 6.2% of their earned income, up to a maximum of $400 for individuals and $800 for married couples who file jointly. Individuals making more $95,000 and couples making more than $190,000 are ineligible.br /The tax credit was designed to help boost the economy by getting more money to consumers in their regular paychecks. Some retirees, like yours truly, face even bigger problems.br /The Social Security Administration is sending out $250 payments to retirees in May as part of the economic stimulus package. The payments will go to people who receive Social Security, Supplemental Security Income, railroad retirement benefits, or veteran’s disability benefits. The payments will go to retirees even if they have earned income and receive the credit. Those retirees will have the payment deducted from their tax credit – when they file their tax returns next year, long after the money will likely have been spent.br /Treas Scty Geithner said that the government understands the concerns amp; were “exploring ways to mitigate that effect.” Rep. Dave Camp of Michigan, the top Republican on the tax-writing House Ways and Means Committee, said Geithner hasn’t responded to his concerns.br /So everyone, especially military retirees, be sure to bank any extra money or next 15 Apr is likely to be very “taxing.”
