Retired Pay Tax Increase

Since several of you have never received an answer from your Senator or Congressmen here is a better explanation of how the Making Work Pay Credit affects what happened to us. I am not tech savvy so go about things the long way, google retired pay vs. new tax code and look for the Military.com website that talks about retired pay and tax code. It takes you to the Military. com forum where a discussion about the FITW increase takes place. Dave M. is the Lead Moderator for Veteran Issues and if you scroll down to Sat. 12 Feb. 2011 09:05 he gets to the meat of what happened over the past couple years and explains it finally so anyone can understand it.

I went over and read it all, replied a few times and I guess they don't like discussion on their discussion forum......

Here is what I have found out. We will get our money back when we file.
It's because
the two-year Making Work Pay (MWP) tax
relief program enacted in 2009 expired at the
end of 2010.
MWP cut tax withholding rates from
checks in 2009 and 2010. The program wasn't
extended to 2011 so the tax tables reverted
back to the old higher levels.
The MWP program was designed to act as
a special stimulus payment to help kick-start
the country out of recession by putting some
extra money in citizens' hands right away.

Well, let's see--We have to give tax cuts to the billionaires, unions can't take pay freezes, we have to give social services to those who don't want to work so I guess that leaves us with a 208 percent tax increase. Sounds fair to me!!!!

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

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.