Obama tax breaks may trip up seniors

This will be an accounting nightmare for seniors who still work full or part-time.-Lou

Obama tax breaks may trip up seniors

Social Security beneficiaries received notices last month that they soon will be getting a $250 check courtesy of President Obama's economic recovery package, but the administration did not say that some recipients may have to give part of it back.

The problem: Seniors who also work and qualify for Mr. Obama's $400 Making Work Pay middle-class tax cuts may find themselves forced to give back some or all of the Social Security bonus come tax-filing time in 2010.

The result, some economists say, could be serious confusion for tax filers.
"This is a compliance headache that borders on being a nightmare. It's going to be complicated to reconcile these payments," said American Enterprise Institute economist Kevin Hassett.

The one-time payments that will be sent this month to millions of Social Security retirees and beneficiaries of other federal entitlement programs are part of a little-noticed provision in the $787 billion economic stimulus law approved by Congress in February.

But recipients who are still working full or part time to supplement their income may also qualify for Mr. Obama's Making Work Pay tax cuts, targeting lower- to middle-income workers.

In the murky world of tax policy, the answer seems to be that they can't fully benefit from both, and the "surplus" has to be sent back to the government.

Read More:
http://www.washingtontimes.com/news/2009/may/03/seniors-face-conflict-over-obama-tax-breaks/