The Making Work Pay Credit (MWPC), a tax credit that was a signature part of President Obama's economic stimulus package in February of 2009, could lead to more than 15.4 million people owing additional taxes, according to a new government report.

 

The MWPC, a provision of the American Recovery and Reinvestment Act of 2009, applies to most taxpayers who earn income during 2009 and 2010. The credit is advanced to taxpayers by their employers through reduced withholding, resulting in an increase in take-home pay.

 

The Treasury Department's Inspector General for Tax Administration said in a new report  that the implementation of the tax credit creates the possibility that millions of taxpayers may be advanced more of the credit through reduced withholding than they are entitled to receive. When filing their tax returns for 2009 and 2010, such taxpayers may ultimately owe additional taxes.  Some also may be subject to estimated tax penalties.

 

There is a way to combat this problem. Use a tax professional to insure you are taking every legitimate deduction possible.