By JERRY COON
Spring is my personal favorite time of the year. Yes, I do like going deer hunting and that happens in the fall. I do like watching football and that happens in the fall. It can be excruciating when we have to watch the Lions, but there are other good teams to watch like our Rockford Rams and several good college teams. I like going to Knoxville, Iowa, in August to watch the World of Outlaws winged sprint cars put on their spectacular racing show. Salmon fishing in Lake Michigan gets going seriously in late summer. Going to Canada fishing in June is always a treat. We try to go camping somewhere in Michigan in the summer.
Those are all good things and good times, but spring is still the best for me. Baseball is getting started. As of this moment, the Tigers have the best team on the planet. Their pitchers are healthy, their defense is the best in the league, and they are going to hit the stuffing out of the ball. This could be that World Championship year. I still play slow-pitch softball and my mind is ready to play. My mind says I can bat like Al Kaline this year, run as fast as the younger guys, play some shortstop, and maybe leg out an inside-the-park home run. The truth is my body isn’t there anymore, but it’s spring, so those things are still technically possible.
I see a few guys in the river fishing already. As soon as we wrap up tax season, I will be one of those guys out there trying for that elusive Rogue River steelhead. I heard The Mines golf course was open last week and it’s a sign that golfing season is going to start pretty soon. I enjoy golfing and, who knows, this year might be the year I get a hole-in-one and break 40 for 9 holes or break 80 for 18. I might be satisfied, however, if I can just play regularly and maybe stay in the 40s and 80s. There is nothing better than going golfing for the first time in the spring, fishing for the first time in the spring, and stepping out on a ball diamond for the first time in the spring. I have all of those things to look forward to every spring. Optimism reigns supreme in the spring. Hooray for spring!
Before spring gets here, however, there is some tax business that has to be dealt with and a few tax articles to write. Since President Obama signed the American Recovery and Reinvestment Act of 2009 on February 17, I have plenty of material for those articles. This week, I will discuss the provision known as the Making Work Pay Credit. I had planned to wait on this article for a few weeks, but I was informed by a reader that his take-home pay has already been adjusted, so I adjusted the schedule.
Millions of taxpayers will receive between $10 and $30 in added take-home pay per week. The Department of the Treasury has drawn up revised tax withholding tables to reduce federal withholding so that take-home pay is increased by the $10-$30.
The Making Work Pay Credit provision also directs that taxpayers will get an offsetting credit on their 2009 tax return. Taxpayers claiming “Single” on their W4 at work should receive about $400 increased take-home pay during the year, and their tax return should reflect an offsetting $400 credit. It’s a break even scenario on the tax return, and the taxpayer gets to keep the $400 received during the year. Taxpayers claiming “Married” on their W4 should receive about $800 during the year with no ill effect on their tax return.
However, there are some caveats that need to be pointed out. What about taxpayers who work two jobs? It looks like those taxpayers could easily receive too much take-home pay during the year. For example, a single taxpayer works at Meijer during the day and moonlights for the White Caps at night. That taxpayer would receive $400 extra from both jobs for a total of $800. However, when that taxpayer files his/her tax return, only $400 in credit will be calculated. That taxpayer may end up with a balance due.
Even worse could be two married taxpayers. Both taxpayers claim “married” on their W4. They would each receive $800 during the year for a total of $1,600. However, when they file their return next year, they only get $800 in credit. They very easily could have a balance due. Possibly worse, if one of the two works a second job, they would receive even more extra take-home pay. It could be a real bad scenario for some taxpayers next year.
My advice is to realize how much additional take-home pay is received. Do some math and, if the total additional take-home pay is much more than $400 for singles and $800 for married filers, it might pay to re-adjust that withholding back to the old rate.
This is Jerry Coon signing off.
Jerry Coon is an Enrolled Agent.
He owns Action Tax Service on Northland Dr in Rockford.
His email address is firstname.lastname@example.org