WASHINGTON — More than 15 million taxpayers may owe the government $250 or more because of how the IRS set up President Obama's tax break that was designed to help consumers spend the economy out of recession.
Individuals with more than one job and married couples who both work may have to repay the government $400, either through a smaller tax refund or a larger tax bill, according to a report released Monday by the Treasury Department's inspector general for tax administration.
Social Security recipients who also earn taxable wages may have to repay $250.
The tax credit, which is supposed to pay individuals up to $400 and couples up to $800, was Obama's signature tax break in the massive stimulus package enacted in February. The credit has increased weekly paychecks for 95 percent of working families.
Workers concerned about whether they are withholding enough taxes can use a calculator on the IRS Web site — http://tiny.cc/AtuhO.
Taxpayers can adjust their withholding by filing a new W-4 form with their employer.
Most workers started receiving the credit through small increases in their paychecks in April. The tax credit was made available through new tax withholding tables issued by the Internal Revenue Service.
The withholding tables, however, do not take into account several common categories of taxpayers. And that could force some people to repay.
For example, a worker with two jobs gets a $400 boost in pay at each job, for a total of $800. That worker, however, only is eligible for a maximum credit of $400, so the remaining $400 will have to be paid back at tax time — either through a smaller refund or a payment to the IRS.
The IRS recognized there could be a similar problem for married couples if both spouses work, so it adjusted the withholding tables. The fix, however, was imperfect.
A married couple is eligible for an $800 credit. However, if both spouses work and make more than $13,000, the new withholding tables give them each a $600 boost — for a total of $1,200.
There were 33 million married couples who both worked in 2008. That's 55 percent of all married couples, according to the Census Bureau.