Nov. 16 (Bloomberg) -- A $400 tax credit provided by the economic stimulus plan may leave more than 15.4 million Americans owing money to the IRS because of under-withholding from their paychecks, an inspector general report said. The IRS said the number will be far lower.

The Treasury Inspector General for Tax Administration said many employers advanced more than the $400-per-individual benefit provided by President Barack Obama’s “making work pay” tax credit. Workers will have to return the difference when they file tax returns with the Internal Revenue Service beginning in January, and some may be forced to pay penalties.

“More than 10 percent of all taxpayers who file individual tax returns for 2009 could owe additional taxes because their withholdings were reduced by more than the Making Work Pay Credit,” Inspector General Russell George said in statement.

Obama campaigned on the tax credit, which is designed to provide workers additional money in their paychecks through reduced tax withholding. The credit was adopted in February as part of the $787 billion economic stimulus measure.

The IRS said in response that the projection that 15.4 million workers would be affected is “overstated” because it doesn’t adjust for a variety of factors, including people who have multiple jobs and those who adjust their own tax withholding. The IRS response was printed in the report.

Reduced Refund

To the degree any workers are affected, IRS spokeswoman Michelle Eldridge said, most people will see a reduced refund in 2009 instead of owing money. About three-quarters of Americans got refunds that averaged $2,836 as of Nov. 6, she said.

The IRS estimates that about 65,000 households will face estimated tax penalties, Eldridge said.

The IRS did agree with a recommendation in the report that it step up efforts to ensure employers withhold the correct amount from paychecks.

“Making Work Pay was designed to deliver much-needed boosts to the paychecks of 95 percent of all working Americans,” said Nayyera Haq, a spokeswoman for the Treasury Department. She said the credit has added as much as $60 to take-home pay each month for about 110 million workers who qualify.

“The IRS has worked quickly and effectively to ensure that taxpayers received the benefit of this credit as soon as possible - starting just days after the Recovery Act became law - and will continue to do so going forward,” Haq said.

The Treasury Inspector General for Tax Administration is an independent division of the Treasury Department and isn’t subject to oversight by Treasury Secretary Timothy Geithner or any other department officials.

The IRS is updating its Web site today with withholding tables for 2010, Eldridge said. Workers concerned they may owe money when they file next year’s tax returns can still adjust their 2009 tax withholdings by filling out a Form W-4 and giving it to their employer, she said.

To contact the reporter on this story: Ryan J. Donmoyer in Washington at rdonmoyer@bloomberg.net

Last Updated: November 16, 2009 11:30 EST