Some Employees May Have to Pay Stimulus Money Back
Remember that stimulus package the government enacted back in February? Well, apparently Uncle Sam got a little too generous.
It's just been announced that up to 15 million taxpayers could owe some of that stimulus money back next year. Why? Under the Making Work Pay tax credit, most working Americans had less withheld on their paychecks, resulting in extra take-home pay of about $60 a month. But when the government changed its withholding tables for the new system, it didn't factor in things like whether someone was married to a working spouse, held more than one job, was retired with income taxes withheld on their pension or was a college student still being claimed as a dependent on their parents' taxes.
So let's say you have two jobs, each one earning at least $20,000. That means you could have been credited twice - and will owe half of that money back to the government on your income taxes. If you're owed a tax refund, that refund will simply be reduced. But if you owe taxes, you'll also have to pay all that stimulus money back to Uncle Sam come April. Fortunately, there's a way to help ease the pain of such nasty surprises.
Whether it's the promise of a paycheck, a raise, an inheritance or, in this case, a handout from the government, you never know for sure what the future will bring (or not bring). It's best to be prepared. What does that mean? Give yourself a cash cushion - a little bit of savings for emergency expenses. The best way to do so is to save a decent portion of your income each month - at least 10% if you can - until you have enough to pay several months worth of living expenses (after that, you'll want to keep saving, but start investing the money to earn interest).
Worried you can't afford to save that kind of cash in this kind of economy? You're not alone. But luckily the answer is right in front of you. You know those debt payments you're making each month? Imagine how much you'd save if you could eliminate them - and their accompanying interest. It's possible with bankruptcy. When you file, you not only get an affordable way to reduce your debt obligation - saving you loads of interest in the future -- but you also get a safe haven from creditor actions like foreclosure. To find out more, just sign up for a totally free personal debt analysis with a Chicago bankruptcy lawyer. Unlike the stimulus package, there will be no strings attached.