Hey Vets… How Is That Tax And Change Working For Ya?

…  Military Retirees are asking questions:

This is from the Defense Finance and Accounting website

Two recent changes to the Internal Revenue Service tax tables have a lot of military retirees and annuitants asking questions. Please read the updates below to find out how these changes may affect you.

Tax increase leads to smaller paychecks for some

If you noticed a reduction in your net pay on a recent retirement paycheck, your taxes may have increased. (GEE YA THINK?)

The Internal Revenue Service recently issued new tax tables for 2010. The new tables included tax increases for individuals in certain tax brackets. DFAS complied with the new tax rates by implementing the new IRS tables with the first paycheck of the year. For military retirees and annuitants, that check was issued Jan. 4, 2010.  (unintended consequences?)

As a result, some military retirees’ and annuitants’ Federal Income Tax Withholding increased despite the fact that they received no Cost of Living Adjustment this year. This is why some retirees’ and annuitants’ net pay decreased.

2009 tax credit may affect refund in 2010

On February 17, 2009, President Barack Obama signed the American Recovery and Reinvestment Act of 2009 into law, providing a refundable credit for many working individuals. The credit was distributed in 2009 through a reduction in the income taxes withheld from salaries and wages, including Retired and Annuitant pay. In accordance with the IRS tax tables, most single taxpayers’ Federal Income Tax Withholding decreased by $400 for the year, and most married taxpayers’ withholding decreased by $800 for the year.

Tax tables do not account for individual circumstances; therefore, depending on their personal situation, some people may have had less withheld from their paychecks than they should have. As a result, some recipients of retired and annuity pay, especially those who are married filing jointly and those who worked in 2009, may owe taxes or receive a smaller refund in April 2010.

Here is a screen capture if the link does not work:

al sends

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