Obama's tax cut - how does it work?
So, my husband works two jobs - one part-time and one full-time - and I work a part-time job. At our part-time jobs, they've started taking nothing out for Federal taxes. At my husband's full-time job, they've reduced it to only $13 per week. I'm wondering if this is going to affect how much we owe/get back at the end of the year, or if it will all equal out to be pretty much the same as it is any other year, because we are required to pay less. Can someone explain it to me? And should we request to have more money held out of our checks, in your opinion?
What I meant to say was will it reduce how much we get back or increase the amount we owe at the end of the year.
- Anonymous1 decade agoFavorite Answer
If you file married filling jointly, you'll get an $800 tax credit on your 2009 taxes. Your employers are trying to compensate for the lowered taxes by taking less from your paychecks.
You need to be very careful. If all 3 of your employers are withholding at the new rates based on a filling status of married, then each employer will take $800 less between now and the end of the year. That means you'll have $2400 less withheld, but you're only getting an $800 tax credit, so your setting yourself up for an unpleasant $1600 surprise.
I suggest you sit down with your most recent pay stub from each job, and some copies of the 2008 tax forms. Add up what your total wages will be for 2009 from all of your pay stubs, and add up the total amount of taxes that will be withheld at the new rates. Run these numbers through a mock 1040 (using a 2008 copy) to see how it comes out. Most of the numbers aren't changing much from 2008 to 2009 so this will give you a pretty good estimate of what your 2009 taxes will look like. Remember you're getting an extra $800 tax credit next year. If your estimate has you owing money at the end of the year, then you need to turn in new W-4 forms at one or more of your employers to have more taxes withheld. You can either specify a certain amount per check, or just change your filling status to single and claim less allowances. There's also a tool on the IRS website that will help you through a similar estimate to determine if you need to turn in a new W-4.Source(s): Here's the IRS webpage that describes the tax credit in more detail. http://www.irs.gov/newsroom/article/0,,id=204447,0...
- ZeltarLv 61 decade ago
The employers have been given updates to the tax tables which effectively take out less tax for the majority of employees. These tables were provided to the employers because the overall tax rate was also reduced. At the end of the year, when you true up how much tax you should have paid over the year, you will pay less than you would have otherwise.
This will hold true for 95% of the population. Based on the small reduction your husband got, and that the other two jobs are part time, I'm positive you fall into this 95% range. However, if your jobs collectively make you over $250,000 annually, then I take back all my comments. You have not gotten a tax cut.
- 4 years ago
Jan 1, they will. The Bush tax cuts all expire at the end of 2010. It is kind of semantics to be honest. Congress is extending the rates put in place by Bush in 2003. You can decide if that makes them now the Obama tax cuts or an extension of the Bush tax cuts. Other than politically. it doesn't really matter what they're called.
- 1 decade ago
Well, that's actually what his "tax return" plan is. When they said individuals could get back as much as $500, they actually meant in tax breaks....which comes out to less then about $10 a week. So if you get paid twice a month, you may be paying about $40 less a month in taxes. That's the big deal.....the BIG "break" regular people are going to get that's supposed to help make our lives easier......$18 a paycheck.
But, I don't believe it should do hardly anything to your taxes at the end of the year. However, if you've read the projections lately, they say that due to the vast amounts of money that Obama is spending, they're guessing that at some point during his presidency, he is indeed going to have to raise taxes to cover the cost of everything he's spending. So don't expect his "tax break" to last for long. You'll be paying it right back out in a few years.
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- King KLv 41 decade ago
Welcome to reality. All of these promises sounded so great to the uneducated wealfare crowd that voted for him but now that the truth is told it "aint" so great after all. And who will pay this back, how long will it last, what does this do to the deficit? It's just a quck fix plan that sounds good when talking to masses of the uneducated but it's a flop. Making an extra $60 a month (which is on the high end) will do nothing more. You think people are going to start buying houses and cars with that? What a joke. Wake up people the coffee has been burning since January.
- Taylor B (ATC)Lv 41 decade ago
... it doesn't work.