Will some taxpayers may have to return money from a new tax credit?

Did you notice a little more money in your paycheck last spring? A new government tax credit called "Making Work Pay" was designed to put a little more money into your pocket each month.

But now, it appears that millions of taxpayers could end up owing Uncle Sam some of that money back when they file their taxes next year.

Unlike the stimulus payments that most taxpayers received early in 2009, (actual checks in the mail or electronic deposits) the "Making Work Pay" credit was designed to offer working folks a bit more money in their take home pay. The tax credit was made available through new withholding tables issued by the IRS, which employers starting using in April, providing many of us with slightly higher paychecks. The tax credit was designed to give Individuals up to $400 while couples could receive up to $800.

However, the new tables did not take into account taxpayers who have multiple jobs, married couples who are both employed and social security recipients who earn taxable income. Now we're hearing that as adjustments are made, that some of those folks may end up have to pay back part of the money. Of course some of that may depend on your total deductions next year along with a number of other factors.

Mark Green from the Internal Revenue Service in Atlanta email me this response regarding the concerns?

1) The IRS believes the number of taxpayers adversely impacted is significantly overstated.
2) The vast majority are not impacted -- 3 out of 4 received refunds last year--as of November--on average--$2836.
3. IRS estimated that only about 68,000 could potentially be faced with an estimated tax penalty --taxpayers can request a waiver of the penalty.
4. It's not too late to adjust your withholding yet for this year, or to make an estimated tax payment if you are concerned your taxes may be under withheld for this year.
5. IRS posted 2010 withholding tables today. Taxpayers will most likely see a little difference in their take home pay given that the new withholding tables will cover 12 months instead of nine months last year.