Thousands of taxpayers are taking to the streets in New York this morning upon hearing the announcement of a tax break announced by the Internal Revenue Service at 9AM Eastern time this morning.
The tax break, affecting the majority of U.S. taxpayers, will mean a tax refund of almost 100% of all personal income taxes withheld during the tax year ending in December 31, 2014.
The law allows for the IRS to declare the tax break whenever there is any indication that such a break could help the U.S. economy. It enables any single taxpayer earning less than $80,000 a year, or a married couple earning less than $190,000 yearly who are filing jointly, to claim all the taxes they paid in 2013 as a deduction from their 2014 taxes. This would entail tax dues of zero to many Americans who earned the same or less in 2014 compared to 2013.
Congress passed the law quietly in 2010 as a way to jump-start the economy and rebuild consumer confidence. Congressman Erol Kiebbler, D-Virginia, the author of the bill said that it is “probably the single most significant taxation law passed in the modern era.”
In New York, office workers have taken to the streets celebrating the unprecedented event, marching on Wall Street under confetti thrown by people celebrating from the office high rises.
Erin Krause, a security guard who was marching with the crowd said that she did not know there was such a law.
“I was overjoyed when I heard about it, all I saw was people coming out, cab drivers stopping in the middle of the street, honking their horns, unbelievable,” Krause said. “God knows I need this tax break, it hasn’t been a good year for me financially,” she adds.
Craig Meyers, a tax adviser from Charles Schwab said that according to the instructions sent to them, the only requirement needed to claim the deduction is to bring a copy of the signed 2012 return and attach it to the 2013 return. There will be a special line item on the new 1040 forms for this special deduction as an adjustment to the total tax due.