Seems we did get a tax hike after all... even if we made less than $250K. Read my lips..a promise broken is an election lost. Ask G.H.W. Bush.
2011 Tax Table Changes
We've received a lot of inquiries from retirees about recent changes to the tax law. Some of you have even asked if we're using the right tax tables. The answer is yes. We implemented the new IRS tax tables, which include a higher Federal Income Tax Withholding Here's an explanation of the changes affecting you, and some information on what you can do if you want to change your withholding.
Expiration of Making Work Pay Tax Credit
The American Recovery and Reinvestment Act of 2009 contained The Making Work Pay tax credit. For military retirees, the impact of the credit temporarily boosted paychecks in 2009 and 2010 by reducing the Federal Income Tax Withholding rates and also the amount of taxes refunded at the end of the year. The program was designed to act as a special stimulus payment to help kick start the economy out of recession by putting some extra money in citizens' hands right away. The credit expired Dec. 31, 2010 and tax tables reverted back to previous levels.
Lower Threshold for Tax Withholding
If you did not have any Federal Income Tax withheld from your pay last year, but are now showing withholding for 2011, it is because federal tax legislation enacted in December lowered the withholding threshold for tax year 2011. This means that you now become subject to Federal Income Tax withholding at a lower income level than in previous years.
Social Security Withholding
Some of you were surprised by the increase in your withholdings because you heard news reports that workers would pay lower taxes in 2011. Those reports referred to a 2 percent reduction in American workers' Social Security withholding. Because we don't withhold social security from your military retirement payments, that change doesn't impact military retirees or annuitants.
The Effects
Overall, the new tax table affected more than 1.56 million military retirees and in most cases caused a decrease in net pay. You will see these changes reflected in your March 1 payment. These net pay decreases have already been posted on myPay and new Retiree Account Statements have been mailed out.
The IRS is responsible for the changes to these Federal Income Tax Withholding tables, based on laws enacted by the United States Congress. On average, Federal Income Tax withheld from retirees' pay has increased between $30 and $40 per month. Seeing less money in your pay is never fun, but there are things you can do to change the amount of pay you receive. After consulting a tax expert or the IRS, you may want to change your withholding.
How to Change Your Withholding
If you want to change your Federal Income Tax Withholding, you can do so using myPay or by completing an IRS Form W-4 and faxing or mailing it to DFAS:
Defense Finance and Accounting Service
U.S. Military Retirement Pay
P.O. Box 7130
London, KY 40742-7130
Fax: 800-469-6559
Please keep in mind that changing your withholding does not change your tax liability and you will have to pay any remaining amount owed when you file your return next April.
DFAS employees cannot advise retirees on tax withholdings. If you have questions, please contact your tax advisor or the IRS.
Yeah, Rick, I am having an extra $20 withheld to cover any amount of taxes they hit me with so I wont have to pay next year when I file for 2011. If I get some of that back great, but I dont expect to. Still as it looks my taxes went up about 42% on the meager amount I get each year. That just puts more of the lower middle class into the poverty level class of citizen.
