Report Millions May Owe Irs Thanks To Obama Tax Credit

11.17.09 | FL News Team

More than 15-million taxpayers may be in for a very unpleasant surprise next year. "The Wall Street Journal" is reporting on a new inspector general report that says millions of taxpayers may owe more to the IRS thanks to an Obama administration tax credit. The idea was to give every American more take-home pay and stimulate the economy. The money was delivered by reducing withholding from each paycheck. While the move did create a larger payday it also means millions of people have had too little cash withheld this year. In the end, taxpayers will have to give some of the tax credit back to the IRS when returns are filed in 2010. The Treasury Department inspector general's audit also predicts more than a million people could face underpayment penalties thanks to the lack of withholding.

 Most at risk are working teens who are claimed by parents as dependents; single taxpayers with more than one job and married couples with both spouses employed. The IRS takes issue with the report saying the 15-million figure is "overstated." The tax agency says the inspector general didn't consider some taxpayers adjusted their withholding anticipating too little might be withheld.