I’m one of those people who plays the tax game all year to try to get away with having the least amount of money stolen from me that I can possibly work out. As a result I have a pretty close relationship with my CPA. We grew up together and played sports together and we even meet up now and then for a beer or three
So, I went this morning and got my taxes done. I owe about $4. My CPA knows how I mess with my stuff all year so I can come as close to breaking even as I can. At the end, we are discussing things for next year when he tells me this:
Be ready in April, when you get the $13 extra a month in your check, you need to be ready to account for it next year, and in '10 that’ll drop to $8. The problem is that the gov’t is changing the withholding tables, but not changing the rates tables. This isn’t a tax cut…it’s a tax credit and you will have to pay taxes on it. Then, in January of '10 you will have to fix things again when the credit drops to $8. If you aren’t careful, you’ll get hammered really hard for not taking this into account.
DO WHAT?? In other words, this tax break for 95% of America is a sham. Even the poor, who normally don’t pay taxes are going to get hit with this, according to him. I don’t know if we have any tax people here that know about this and I have to say that I totally trust my CPA, but is this true?