"Tax cut" alert

I work for a small company and I'm really the only employee except the owner. He has an accountant who reviews my bookkeeping every month and he handles all the payroll and tax issues. I asked him yesterday (as I was preparing my payroll check) if I should change the withholding amount because I understood that the Obama tax cut passed by Congress (and heralded today by the President in his speech at noon), would give me an extra $7-$13 in my paycheck. Brian told me that I had a choice. He said I could "pay it now, or pay it next April." Not being an accountant, I asked him to please explain...

It seems that this "tax cut" is not really a tax cut at all. It's a "cut" in what is being withheld by the employer. But there is no mention of any actual tax cut in the tax tables. You STILL OWE THE SAME AMOUNT. The total tax will be due in April 2010, so you'll have to give it all back or hope that your deductions will counter balance what you owe. So if you got a nice refund this year (which is just a tax free loan to the government), it will be much smaller next year (multiply the higher balance you get times the number of paychecks and you'll have an idea.) And if you owed money this year, prepare to pay a lot more next year.

Congress and the President know this, of course, and the media should too, but it's not mentioned, except in a few places. So, do yourself a favor. Check this out, of course and if you confirm it, tell your employer to NOT "give" you the extra cash, unless you take it and put it in your piggy bank marked "IRS-due 4/15/10."

Cheers.