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Good news and bad news on taxes

By Congresswoman Virginia Foxx

As summer fades into autumn and families wrap up vacations and children return to school North Carolina taxpayers are noticing some other seasonal change.  For instance, the state’s sales tax jumped from 6.75 percent to 7.75 percent at the beginning of September.  That’s in addition to a recent tax law change that prevented the state’s gas tax from dropping below 29 cents per gallon.  All told, North Carolinians on average paid $3,663 in state and local taxes last year, according to the non-partisan Tax Foundation.  

On the other hand, the Tax Foundation estimated that the average household in the 5th Congressional District paid about $13,000 in federal taxes.  Fortunately there is some good news for taxpayers. This year most workers in North Carolina have seen a small increase in their paychecks.  This is due to a tax credit included in the stimulus package that Congress passed in February. 

The tax credit is designed to give every employee more take home pay each month and typically amounts to $400 for singles and $800 for married couples. I support this tax credit, but the overwhelming amount of questionable and non-simulative spending in the “stimulus” bill meant that I was unable to support the whole package.

While the adjustments to workers’ paychecks for this credit are automatic, I want to make sure North Carolinians are aware of some preventative measures they may need to take to avoid an unwelcome surprise as this coming winter gives way to Tax Day.

A relatively small group of North Carolina taxpayers may be receiving a larger tax credit than they are owed.  As a result, in some instances a few taxpayers will find themselves owing a significant tax bill in 2010.

This scenario applies mostly to two groups of people: singles with two jobs and married couples where both spouses are employed.  For instance, single taxpayers with multiple jobs are at risk of having each employer give the full tax credit.  Thus, workers with two jobs might be given the full $400 credit at each place of employment and find themselves having to “pay back” the extra tax credit on April 15. 

Also, married taxpayers might experience a similar problem if both spouses are employed.  If the husband receives the entire $800 credit and his wife’s employer also gives the full credit they are, perhaps unknowingly, getting a $1600 credit and will find themselves forced to pay back an unexpected $800.

Thankfully, the IRS has made a lot of information available to taxpayers. If you visit the IRS’ website, IRS.gov, and use the withholding calculator tool, you can verify that the correct amount of taxes is being withheld from your paycheck.  You will need your most recent pay stub and a copy of your most recent tax return.   The site also includes helpful instructions for adjusting your tax withholding should that prove necessary.

It’s still not too late to adjust your income tax withholding if you suspect a change is in order. Making some simple changes might help you avoid an unexpected shock on next year’s tax return.  I recommend that anyone who needs to make changes do so as soon as possible in order to guarantee the 2009 tax season goes smoothly.  Anyone with additional questions can contact the tax experts at the IRS at 800-829-1040.

U.S. Rep. Virginia Foxx represents the Fifth Congressional District of North Carolina.  She currently serves on the House Rules Committee.  You may contact her office toll free at 1-866-677-8968 or e-mail her from her website, www.foxx.house.gov.