Withholding adjustment came without tax change


POSTED: Friday, August 28, 2009

QUESTION: Most of us saw an increase in our paychecks around March as lower federal withholding rates went into effect as a part of the administration's economic stimulus program. While the extra money is appreciated, what I don't know is whether there was a tax cut to match the lower withholding. If the tax rates remained the same, many of us could be in for a nasty surprise in April as we discover not enough income has been withheld to cover taxes due. Can you clarify whether both withholding and tax rates decreased?

ANSWER: No change was made to tax rates, just to withholding tables.

Under the new Making Work Pay Tax Credit, the Internal Revenue Service says your employer needed to adjust your withholding by April 1 so that you don't end up having too little income tax withheld and possibly end up owing taxes next year.

The IRS issued updated withholding tables in February that incorporated the new credit, one of the key provisions in the American Recovery and reinvestment Act of 2009.

Using the new withholding tables, most American workers typically began receiving more in each paycheck in the spring. Eligible workers did not need to do anything to get the extra money.

Taxpayers are advised to check the new withholding tables because some could find less tax being withheld than they prefer.

For information and to check on your withholding, go to http://www.irs.gov/newsroom/article/0,,id=204447,00.html.

The tax credit, available for 2009 and 2010, is 6.2 percent of a taxpayer's earned income. The maximum credit is $800 for a married couple filing a joint return and $400 for other taxpayers. It is not available for higher-income taxpayers—generally married couples earning more than $150,000 or other taxpayers earning more than $75,000.

QUESTION: How many state employees are there in Hawaii, from the governor down? How does this number compare with the other 49 states?

ANSWER: According to the 2008 state Data Book, compiled by the state Department of Business, Economic Development and Tourism, Hawaii had 74,300 state workers, 32,200 federal workers and 18,550 county workers.

The 2008 population was 1,288,198, according to state figures.

To compare states, we checked the latest U.S. Census Bureau figures available, from March 2007.

You can check the numbers for each state at http://www.census.gov/govs/apes.

With a 2000 Census population of 1,211,537, Hawaii had 51,289 full-time employees and 19,120 part-time employees—70,409 total.

Here are the figures for some of the other states, with 2000 populations in parentheses:

Alaska, 23,647 full time, 5,550 part time (626,932); California—334,432 full time; 145,162 part time (33,871,648—most populous state); Indiana, 76,796 full time, 36,778 part time (6,080,485); Maine, 20,714 full time; 8,186 part time (1,274,923); Nevada, 25,336 full time, 10,283 part time (1,998,257); New York, 236,719 full time, 48,343 part time (18,976,457); Oregon, 52,610 full time, 20,776 part time (3,421,399); Rhode Island, 18,511 full time, 6,407 part time (1,048,319); Texas, 259,578 full time, 74,800 part time (20,851,820); Wisconsin, 54,850 full time, 43,737 part time (5,363,675).