I'm retired military... so the freeze on cost of living increases for Gov't people affected us (again). I can deal with that. But now they apparently raised taxes, so instead of a cost of living increase, there is a decrease. My retired pay is now about 3% lower. What's up with that?
Military Retirees?
- Thread starter Frosty
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I dont know. Mine is the same.
Edited: I just verified my statement from DFAS and nothing has changed.
Edited: I just verified my statement from DFAS and nothing has changed.
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Yep, DH just got his statement and noticed that the withholding has gone up. So much for tax cuts and freezes. Gas is going up, food is going up, taxes are going up, but there is no cost-of-living adjustment. What a deal.
The past two years the withholding tables were adjusted to take less income tax withholding to provide for the Making Work Pay tax credit. That tax credit has expired so the income tax withholding has gone back up again. For 2011, instead of the Making Work Pay tax credit, they have lowered employees portion of the Social Security tax by 2%, so that offsets the loss of the tax credit in an average worker's paycheck, but since we don't pay into SS on retirement benefits we see it as an overall loss.
Sounds like a shell game to me. Our pay is the same this month, but come March, will be down because of this.
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It figures. Grrrrr.
It figures. Grrrrr.
If you have multiple incomes it may benefit you to check your withholding exemptions for this year to make sure you aren't going to receive a whopping tax refund at the end of the year. It is better to have that money in your paychecks than to give the the government a big interest free loan for the year.
When the Making Work Pay tax credit went into effect the credit was worth $400 for a single person and $800 for a married couple. The problem was that by adjusting the withholding tables they gave back $400 per income in reduced withholding. Those with multiple incomes found that they were possibly getting back way more in reduced withholding than the the tax credit was actually worth. Many adjusted their withholding exemptions to ensure that the government was actually taking enough to cover their taxes for the year.
Now that the withholding schedules are back to normal, it is possible that the government is over-withholding on your incomes. You can use the IRS Withholding Calculator to calculate your tax liability for the year and adjust your withholding to the rates appropriate to your situation. It may be possible to get some of that money back into your paychecks.
http://www.irs.gov/individuals/article/0,,id=96196,00.html
When the Making Work Pay tax credit went into effect the credit was worth $400 for a single person and $800 for a married couple. The problem was that by adjusting the withholding tables they gave back $400 per income in reduced withholding. Those with multiple incomes found that they were possibly getting back way more in reduced withholding than the the tax credit was actually worth. Many adjusted their withholding exemptions to ensure that the government was actually taking enough to cover their taxes for the year.
Now that the withholding schedules are back to normal, it is possible that the government is over-withholding on your incomes. You can use the IRS Withholding Calculator to calculate your tax liability for the year and adjust your withholding to the rates appropriate to your situation. It may be possible to get some of that money back into your paychecks.
http://www.irs.gov/individuals/article/0,,id=96196,00.html
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In the long run, not really. Retirement pensions alone weren't even eligible for the Making Work Pay tax credit anyways. Only earned income from regular jobs were. They were giving us back $400 a year in reduced withholding regardless of that fact. At the end of the year a military pensioner either got $400 less back in their tax refund, or ended up owing a little as a result of this.
So, since military pensions didn't even qualify for the tax credit anyway, the tax rate is neither going up nor down this year vs last year, but the amount being withheld is going up, unless you take the steps to adjust your total withholding for the year to match as close as possible to what you'll actually owe at the end of the year.
Does that make sense?
In the long run, not really. Retirement pensions alone weren't even eligible for the Making Work Pay tax credit anyways. Only earned income from regular jobs were. They were giving us back $400 a year in reduced withholding regardless of that fact. At the end of the year a military pensioner either got $400 less back in their tax refund, or ended up owing a little as a result of this.
So, since military pensions didn't even qualify for the tax credit anyway, the tax rate is neither going up nor down this year vs last year, but the amount being withheld is going up, unless you take the steps to adjust your total withholding for the year to match as close as possible to what you'll actually owe at the end of the year.
Does that make sense?
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Mac, none of it makes sense to me. We live on military pension alone, below poverty level. And Georgia wasn't satisfied with the money withheld this year, wanted more, even though we will get back a small refund from the feds, what we paid in. Had to pay them every year because they never took federal tax out of the pension, then DH changed it so we wouldn't have a huge bill.
Honestly, the tax system is so ridiculously complicated and it doesn't have to be. There needs to be a major revamp on that.
Honestly, the tax system is so ridiculously complicated and it doesn't have to be. There needs to be a major revamp on that.
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