TAX CREDIT MAY HAVE BEEN TOO BIG

Remember the increase in your paycheck back in April? This was because instead of sending you a $400 check the government decided to just decrease your withholding. What did that mean? Just less withheld.

I said at that time that you might have to pay for this additional money when you file your return because your withholding was less, therefore your refund would be less or, heaven forbid you might actually have to pay in. Well now the government has figured this out. Below is an article from Money.

Tax credit may have been too big for some recipients
As many as 15.4 million tax filers may have received too much under the Making Work Pay tax credit, the Treasury Department says. As a result, those people will get a smaller refund or may even have to repay some of the over-payments when they file their 2009 taxes. The tax credit was part of the stimulus package passed in February. CNNMoney.com (11/17)

RECOVERY.COM IS SPOT ON IN TRACKING STIMULUS FUNDS

If you're interested in finding out where the stimulus money is going, click on www.recovery.com.

Recovery.com, a Web site run by government-procurement researcher Onvia in Seattle, is seen to be faster at providing information on how stimulus funds are being spent than Recovery.gov, the federal government's Web site for that purpose. Information on Recovery.com is more up to date, and it tracks local contracts in real time. Onvia's data show that stimulus spending is slow, perhaps because of excessive caution about results, but businesses are eagerly awaiting funds to get started on projects.

HEY RETIRED PEOPLE - YOUR STIMULUS CHECK IS IN THE MAIL

Stimulus Payments Being Mailed to Retirees

Eligible working taxpayers most likely have a little more money ($400) in their pocket because they had reduced withholding.

For those whose income consists primarily of social security benefits, supplemental security income, disabled veterans benefits or railroad retirement benefits, the government will send checks for $250 based on information that it already has. Eligible individuals who are collecting these benefits while continuing to work will receive a Making Work Pay Credit of the greater of $250 or $400.

But watch out, this is a one-time payment that will be taxable as ordinary income if the retiree has sufficient income this year.

Larry Kopsa CPA

MY 2008 INCOME IS HIGHER. DO I STILL GET A STIMULUS CHECK FOR 2009?

I had an unusual situation in 2008 that boosted my income from all sources (gross and AGI) by about $15,000 over normal (to over $100K). $11,000 of that went direct to Uncle Sam (I withdrew $ from IRA to pay tax bill on 2007). Does that mean zero stimulus package payment for me and my husband? Is there an appeals process for special situations?

Nancy

Nancy, sorry, no appeals are built in, but you may not be in a bad spot. I presume that you are referring to the 2009 stimulus, not the 2008 stimulus. (It would seem that we should be pretty stimulated with all of this so called stimulus that they are throwing around). Anyway, here is the deal on the 2009 law.

· Since you are an employee you will get the stimulus through a reduction in your payroll taxes. The money will come though a higher payroll check estimated at about $13 per month. You will get this no matter what.

· The IRS gave your employer new payroll withholding payments. You should probably have seen an increase in your net payroll check.

· When you file your 2009 tax return (by April 15th of 2010) you or your tax preparer will determine whether or not you qualified. If you did not qualify, you will have to pay the money back with your 2009 1040.

· Since you are married, in order to qualify, your adjusted gross income (AGI) for 2009 would have to be under $150,000. The additional money that you made in 2008 makes no difference; it is just your 2009 AGI.

· If you are wondering what you’re AGI is, for 2008 it is on line 87 on the bottom of page one of your 1040.

Please let me know if you have any other questions or if your question was on the 2008 stimulus.

It is a pleasure serving you.

Larry Kopsa CPA