New IRS withholding rates fatten paychecks — a little

By Jon Moffett

Rather than a lump sum, workers will see an extra $8-$15 per paycheck.

YOUNGSTOWN — That extra few bucks in your latest paycheck was not a mistake.

The Internal Revenue Service implemented a “Making Work Pay” tax credit as part of the stimulus legislation. By April 1, employers were required to deduct less taxes from workers’ pay. The new laws impact about 110 million working families, including 4.5 million Ohio households and averages between $8 and $15 per paycheck.

“This is a result of the IRS adjusting the withholding tables,” said Eric Erickson, IRS spokesman for Ohio and West Virginia. “People are going to have less money withheld and more money in their paychecks.”

The tables are posted on the organization’s Web site, IRS.gov. The tax cuts are determined by marital status and pay frequency and rate. The credit allows up to $400 for a single worker or $800 for a married couple this year.

What people are doing with the money varies.

“I threw money back into my retirement account because now is the time to buy,” said Patricia Dugan, a legal aide in Youngstown. She added that a lump sum would’ve been a better option because it would have given people a chance to better stimulate the economy.

“It’s going to let people purchase things at the grocery store, but it won’t go toward any big-ticket purchases.”

The preference for a lump sum seems to be a popular stance. Mike Golubic, 58, of Canfield, said he’d have used the money for home improvements had he received a lump sum. He added that the extra cash will help but not dramatically.

“It’s nice to get a little more money, but it’s not going to change my lifestyle,” he said.

Gloria Harris, 33, and Jada Wright, 43, work for a management company in the city. They said they will hardly notice the increase.

“It’s a ‘Catch 22,’” Harris said. “Everything kind of equals out because the price of everything is going up.”

Wright agreed, saying, “It’s not even going to mean anything for me. I won’t see it.”

Some people might have used a lump sum payment to buy larger items, she added.

Erickson said some workers are unaware of the change because they don’t have to do anything to get the extra money. He added that there hasn’t been much uproar about the changes because people still have their attention focused on filing their 2008 income taxes due April 15.

“I haven’t heard a lot internally [on] how it has impacted our calls ... because it doesn’t impact their filings right now,” he said. “I just don’t think people are as concerned with it right now.”

Erickson said that the people who have a second job to supplement income may need to take action. He said those workers must make sure their employers take out the appropriate money for taxes owed.

U.S. Sen. Sherrod Brown, D-Ohio, issued a statement about the legislation, calling it necessary.

“This tax relief is long overdue for middle class families in Ohio,” Brown said in the statement. “For too long, working families saw their wages stagnate and their monthly costs explode ... President Obama’s ‘Making Work Pay’ tax cut will help family budgets that have been stretched thin.”

jmoffett@vindy.com