Tax credit could cost you

By Evrod Cassimy - bio | email

RICHMOND, VA (WWBT) - That extra money in your paycheck could mean you owe extra money to Uncle Sam. A review of the IRS' Making Work Pay tax credit has found that millions of taxpayers might be in the red come April 15th.

"Some of the people will not qualify for the credit and there's no way of knowing that when the money is withheld from the paycheck," said VUU Professor of Accounting, Phil Umansky.

You're at risk of owing if you make more than $75,000 per year, have more than one job or you and your spouse make more than $150,000 per year combined. People who receive social security benefits while earning taxable wages could also owe at tax-time.

"I'm glad that it's not affecting people with low incomes," said Beth Bohn. "If there has to be a tax increase I prefer it to be on people that could probably afford it more."

The review of the credit program found that it does not take into consideration people who have more than one job and essentially receive the credit twice. It recommends you double check with your employer before the end of the year to increase your withholdings.

"If you do not pay enough taxes then there can be penalties for not paying enough taxes throughout the year because basically the tax system is a pay as you go program," added Umansky.

The IRS is aware of the review and is looking to take corrective actions.

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