-Corey

Looking back at the article it appears they’ve corrected the scenarios, but not the “answer.” It should now read:

“The short answer? Yes, Billings would get back the $8,000 plus what he’d overpaid. The long answer? Yes.”

If it worked the way CNN suggests, it would penalize people who withheld a lot in taxes. Let’s say you and I both have 10K in tax liability. You have 10K withheld ($0 refund), and I have 17,995 withheld (i.e. a $7995 refund).

Under CNN Money’s scheme, we would both get a 8K refund … $8000 in “new money” for you and $5 in “new money” for me … in spite of the fact that our tax situation (aside from withholding) is identical. Essentially, I gave the government an interest-free loan during the year, and I would be penalized for it. Huh?

I have had a couple of tax classes (I was an accounting major in college) and I would be shocked to see something this crazy implemented.

It’s safe to say that CNN Money is just wrong. Very disturbing to see a mistake of that magnitude …

I qualify for the $8000 first time homebuyer tax credit. I plan on applying this to my 2008 taxes. I came up with 2 obvious scenarios. I owe the Govt or I get a refund. I’ll say my Federal Tax liability is $6,000 for the year.

Scenario 1: I have $5,500 in taxes withheld from my paycheck by my employer (thus, I would owe $500). I apply the $8,000 tax credit and now I receive a $7,500 refund.

Scenario 2: I have $6,600 in taxes withheld from my paycheck from my employer (thus, I would get a $600 refund). I apply the $8,000 tax credit and now my refund is $8,600.

Is this correct logic? A CNN article explained the 2nd scenario as I would only be getting an $8,000 refund instead of $8,600. How could that be? The Tax credit would only then be basically worth $7,400 just because my employer withheld more money in scenario 2 as compared to 1. Or, is the CNN Writer just incorrect?

Thanks in advance.