In a recently released report, TIGTA (Treasury Inspector General for Tax Administration) estimated that more than 15.4 million taxpayers could unexpectedly owe taxes for tax year 2009 as a result of underwitholding due to the Making Work Pay credit. The credit, created in the stimulus bill, is in effect for 2009 and 2010. TIGTA identified individuals who would receive more of the credit than they were entitled to receive. The modifications to the income tax withholding tables did not take into account dependents who receive wages, single taxpayers holding more than one job, taxpayers who receive pension payments, and Social Security recipients who receive wages. The IRS is going to notify taxpayers that they can request a waiver if they are assessed the penalty or if they believe it will affect them. In a related notice, the IRS released the percentage method withholding tables for 2010 with no change in withholding allowance amounts. The changes in the percentage method tables will result in more tax being withheld as the Making Work Pay tax credit is factored in over the full calendar year.

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