From Obama, the Tax Cut Nobody Heard Of

Looks like the higher income bracket will pay more taxes. Traditionally Republicans increase the taxes on the middle to low income brackets. Guess we will find out on January 1st.
 
Beowulf said:
Looks like the higher income bracket will pay more taxes. Traditionally Republicans increase the taxes on the middle to low income brackets. Guess we will find out on January 1st.
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Not True, traditionally Republicans raise and lower taxes on all individuals equally. It's called fairness. Everyone carrying their weight. Higher tax brackets still pay a higher %.....even under Republicans.
 
TXgolfer said:
Not True, traditionally Republicans raise and lower taxes on all individuals equally. It's called fairness. Everyone carrying their weight. Higher tax brackets still pay a higher %.....even under Republicans.
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Not really. I haven't forgotten the Reagan years.
 
The share of the income tax burden borne by the top 10 percent of taxpayers increased from 48.0 percent in 1981 to 57.2 percent in 1988. Meanwhile, the share of income taxes paid by the bottom 50 percent of taxpayers dropped from 7.5 percent in 1981 to 5.7 percent in 1988.

A middle class of taxpayers can be defined as those between the 50th percentile and the 95th percentile (those earning between $18,367 and $72,735 in 1988). Between 1981 and 1988, the income tax burden of the middle class declined from 57.5 percent in 1981 to 48.7 percent in 1988. This 8.8 percentage point decline in middle class tax burden is entirely accounted for by the increase borne by the top one percent.
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The Reagan Tax Cuts: Lessons for Tax Reform
 
This is Obama's program:

The Making Work Pay Tax Credit

How will the Making Work Pay tax credit affect you?

Most wage earners will benefit from larger paychecks in 2009 and 2010 as a result of the changes made to the federal income tax withholding tables to implement the Making Work Pay tax credit. However, some people may find that the changes built into the withholding tables result in less tax being withheld than they prefer.

If you're not eligible for the Making Work Pay tax credit, withholding changes could mean a smaller refund next spring. A limited number of people, including those who usually receive very small refunds, could in some situations owe a small amount rather than receiving a refund. Those who should pay particular attention to their withholding include:

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Pensioners (see more information under Pensioners, below)
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Married couples with two incomes
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Individuals with multiple jobs
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Dependents
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Some Social Security recipients who work
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Workers without valid Social Security numbers

The Making Work Pay tax credit, normally a maximum of $400 for working individuals and $800 for working married couples, is reduced by the amount of any Economic Recovery Payment ($250 per eligible recipient of Social Security, Supplemental Security Income, Railroad Retirement or Veteran's benefits) or Special Credit for Certain Government Retirees ($250 per eligible federal or state retiree) that you receive. If you are affected by this reduction, you should review your withholding to ensure that sufficient funds have been withheld to meet your tax obligation.

If you wind up owing tax because too little was taken out of your paychecks during 2009, you may qualify for special relief on a penalty that sometimes applies.

If you believe your current withholding is not appropriate for your personal situation, you can perform a quick check using the IRS withholding calculator. If you are not familiar with the withholding calculator, watch this IRS how-to video for instructions. When you have determined your correct withholding, make any adjustments by filing a revised Form W-4, Employee's Withholding Allowance Certificate, with your employer.

Pensioners

Pensioners do not qualify for the Making Work Pay credit, unless they receive earned income. However, because the 2009 and the 2010 withholding tables also apply to pensioners, the IRS has provided pension plans with an optional adjustment procedure. If you are a pensioner with questions about your withholding, contact your pension plan administrator.

If desired, pensioners can adjust their withholding by filing Form W-4P, Withholding Certificate for Pension or Annuity Payments.

Self-Employed

Self-employed individuals can also benefit now from the Making Work Pay tax credit by evaluating their expected income tax liability, allowing for this tax credit if they are eligible, and making the appropriate adjustment in the amount of their regularly scheduled estimated tax payments.

Your 2009 Tax Return

Information on completing your tax return if you're claiming the tax credit is available. To find out if you received a 2009 Economic Recovery Payment, use the Did I Receive a 2009 Economic Recovery Payment? online feature. You also may call our automated telephone service at 1-866-234-2942 and select Option 1 to verify whether you received the payment.

For 2010: Notice 1036 contains the 2010 withholding tables, which reflect reduced withholding resulting from the Making Work Pay credit. The notice also includes information about an optional procedure permitting administrators of pension plans to offset the withholding reduction.

For 2009: In February 2009 the IRS issued updated withholding tables to help employers implement the withholding adjustments required by the Making Work Pay credit. More details are available in Publication 15-T.

In May 2009, the IRS subsequently issued an optional adjustment procedure allowing plan administrators to offset the February 2009 withholding reduction for some pension recipients.
Questions and Answers

If you have questions about the Making Work Pay provision, these questions and answers might help.
General Information

In 2009 and 2010, the Making Work Pay provision of the American Recovery and Reinvestment Act will provide a refundable tax credit of up to $400 for working individuals and up to $800 for married taxpayers filing joint returns.

This tax credit will be calculated at a rate of 6.2 percent of earned income and will phase out for taxpayers with modified adjusted gross income in excess of $75,000, or $150,000 for married couples filing jointly.

For people who receive a paycheck and are subject to withholding, the credit will typically be handled by their employers through automated withholding changes. These changes may result in an increase in take-home pay. The amount of the credit will be computed on the employee's 2009 income tax return filed in 2010 and the employee's 2010 tax return filed in 2011. Taxpayers who do not have taxes withheld by an employer during the year can also claim the credit on their 2009 and 2010 tax returns.

It is not necessary to do anything to get the automatic withholding change. However, an employee with multiple jobs or a married couple whose combined income places it in a higher tax bracket should consult the IRS withholding calculator and, if necessary, submit a revised Form W-4, Employee's Withholding Allowance Certificate, to ensure enough tax is withheld. Publication 919, How Do I Adjust My Tax Withholding? provides additional guidance for tax withholding including a special Making Work Pay worksheet.

Related Items:

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Marketing products for stakeholders
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The American Recovery and Reinvestment Act of 2009: Information Center
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jillio said:
The post to which I responded was specific to withholding taxes.
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I understand that...but your real point is a TAX BREAK!!!!
By giving less witholding to paycheckers, they get a tax break and those who are NOT paycheckers don't get one. Now explain the fairness....if you can!
 
Reba said:
This is Obama's program:
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Thanks for the link, but I am sure there is more to it than that. I have seen other sites that explain the discrepancies but they are all gobbledy gook in the final analysis. :lol:
 
Beowulf said:
Thanks for the link, but I am sure there is more to it than that. I have seen other sites that explain the discrepancies but they are all gobbledy gook in the final analysis. :lol:
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That was the exact "break" that was referred to by name in your original article.
 
Beowulf said:
Looks like the higher income bracket will pay more taxes. Traditionally Republicans increase the taxes on the middle to low income brackets. Guess we will find out on January 1st.
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There you go.
 
rolling7 said:
I understand that...but your real point is a TAX BREAK!!!!
By giving less witholding to paycheckers, they get a tax break and those who are NOT paycheckers don't get one. Now explain the fairness....if you can!
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Same type of situation as the top 1% getting breaks that allow them to pay less tax than the average working individual in a middle income bracket. If you can explain the fairness of that one, I'd be happy to read it.
 
rolling7 said:
Thank you for explaining my point for me......we can't expect these young ADers to understand.
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If it is me that you are referring to as young, I want to thank you.:laugh2: But I can assure you that your assumption is anything but accurate.
 
jillio said:
If it is me that you are referring to as young, I want to thank you.:laugh2: But I can assure you that your assumption is anything but accurate.
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I always envisioned rolling7 to be old as Noah.

Or will I get banned for making a religious reference? :(
 
souggy said:
I always envisioned rolling7 to be old as Noah.

Or will I get banned for making a religious reference? :(
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I would certainly hope not. But in that case, I guess I could be young in direct comparison.:giggle:

I like to think of myself as young in heart and mind. Prevents stagnation.
 
jillio said:
Same type of situation as the top 1% getting breaks that allow them to pay less tax than the average working individual in a middle income bracket. If you can explain the fairness of that one, I'd be happy to read it.
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A paychecker and another paychecker are equal...note we are not talking about the amount of the paycheck...and both get a tax break from obama.
The non-paychecker gets nothing...totally unequal treatment.
Now to your point...the top 1% pay tax and the middle income pay tax...totally equal!!!!! Note the rates are different, I'll give you that but this is not about TAX RATES!!!!!
this is about who does and who does NOT get a tax break....if one does, the other should too....if one does not, then the other should not. GOT IT??
I doubt it...this is over your head...listen to your elders...we been down this road before.
 
rolling7 said:
A paychecker and another paychecker are equal...note we are not talking about the amount of the paycheck...and both get a tax break from obama.
The non-paychecker gets nothing...totally unequal treatment.
Now to your point...the top 1% pay tax and the middle income pay tax...totally equal!!!!! Note the rates are different, I'll give you that but this is not about TAX RATES!!!!!
this is about who does and who does NOT get a tax break....if one does, the other should too....if one does not, then the other should not. GOT IT??
I doubt it...this is over your head...listen to your elders...we been down this road before.
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Help me out here with these three scenarios.

1. If a married couple brings home paychecks totaling $36,000 per year, they will get the tax break.

2. If a married couple both work but don't get paid by an employer who withholds taxes from them, and they earn $36,000 per year, they don't get the tax break.

3. If a married couple are both retired after working and paying taxes for over several decades, and their joint pensions are $36,000 per year, they don't get the tax break.

Are the three above examples correct, even though they are all in the same income bracket?
 
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