Sleight Of Hand By Congress And The IRS ?

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Remember how, as part of the stimulus package, you had less taxes taken out of your paycheck or if you were on Social Security you received $250 (and no cost of living increase) ?  Well, I hope you didn’t celebrate too enthusiastically–the IRS wants their money back! 

My husband does our taxes on Turbo-Tax, and I confess that I really don’t pay a lot of attention to his spouse-type grousings as he is working on taxes.  However, every now and then I am amazed at what he discovers.  Last night was one of those moments.  I retired in February of 2009 and began collecting Social Security.  Because I was not retired in January, I did not receive the $250 bonus paid to Social Security recipients.  Ok.  Fine.  Well, after my husband filed our taxes, the IRS refused our return, asking if I had received the $250.  They even included a phone number in their e-mail, so I called it.  The computer on the other end of the phone confirmed that I had not, in fact, received the $250.  OK.  We agree.  My husband then went back to his computer and confirmed that I had not received that income.  Oddly enough, at that point our tax refund grew by $250!  Had I received the money, I would never have known that they were taking it back.

Evidently, many other people are having rude awakenings about the stimulus tax breaks they received last year.  Walletpop.com (I found the link on AOL.  I am not familiar with them, but they confirm my story.) posted a story yesterday about taxpayers who thought that the change in their withholding that was done as part of the stimulus was actually a tax cut.  There are some serious jolts going on. 

The article reports:

“If you and your spouse both had jobs in 2009, each of you was eligible for a $400 credit — a total of $800 if you filed together (this assumes you made more than $13,000 between the two of you). Well, someone didn’t double-check the math and you and your spouse actually received $600 each for a total of $1,200 in tax credit.
Now you and your spouse owe the government $400 because of the glitch. Not that it’s any consolation, but you’re not alone — 55% of married couples fall into this category.”
There is another aspect to this.  If Social Security recipients have to pay back the $250, it doesn’t cost the government anything other than interest payments on the debt.  The $250 is not a cost as it will be paid back.  It’s bad enough that the stimulus package cost over a trillion dollars and did not keep unemployment below 8.5 percent (as promised), but the fact that the Americans who will pay the bill for this very expensive program didn’t even really receive the benefits they were told they would receive is outrageous.  We have truly been snookered.