Retired Pay Tax Increase

Mailman01 wrote: Larry, do you think the $50 now being withheld is to make up for you having zero withheld in the past, OR, have your, and our, taxes actually INCREASED by that much and this has nothing to do with your previous Zero withholding? If your theory is true, then I will not be too upset since I as well had very little withheld. But I am concerned it is a pure and simple tax INCREASE.

I don't know if it's because of my previous zero withholding, or an increase. The tax tables for before and current would have to be compared.

Based only on information that came with my wife's take-home decrease, the tax withheld last year was less because the Work Credit 'made' employers take less out of the check so the employee got to take more home each week.

That is no longer valid, so the employer now takes out the 'normal' amount. It gave you more to spend, but this new withholding is not truly a tax increase, it's more like the removal of a deduction.

Any way you slice the cake, I've still got less in my pocket and the government has more.

gesuhan wrote: Finally received a letter from Senator McConnell of Ky. He explained all about the Making Work Pay Credit, which has been explained above, but he also added further explanation. He exlained that the Making work Pay Credit has expired, which I believe most of us knew, but also added:

"Retirees who receive income from pensions are generally ineligible for the Making Work Pay Credit. Despite this, the entity" (our payment centers) "making their pension payments may have used the IRS withholding tables that reflected the Making Work Pay credit, thus lowering their federal tax withholding. This meant that many retirees had to pay back the credit when they filed their tax returns for 2009 and 2010. Unfortunately, the same tax tables may have been used in the first weeks of 2011, perpetuating some of the confusion over federal tax withholding. I am concerned about the empact this matter would have on retirees' pension checks and have been assured by the IRS officials that the problem will be resolved by March 31, 2011."

d.bentley

Please read the above statement very carefully. My interpation (be it valid or not) is that retirees were never supposed to be involved with the "making work pay credit", and that if withholdings were made from your pay check each month during 2009 and 2010 you had to pay it back when you paid your end of year taxes. "am I interrupting this correct?" Anyway, hopefully they can get it all resolved.

d.bentley

I believe you are properly interpreting this. Read somewhere recently that back in 08 or 09 due to the Stimulus initiative, withholdings were reduced from govt checks and we had to make up for it at the end of the year. Supposedly now the withholdings have returned to "pre-Stimulus" amounts and we should not have to pay quite so much at tax filing time.
Marty

Now what? I just heard the president say something about a payroll increase due to the high price of gas. Was I dreaming, and is this for us people who just lost money from the last payroll mess. I just can't keep up with all this. Maybe we should have a tickertape telling us about what we will loose next..