Noticed more federal tax taken out of pension check. Did withholding go up? Thought we were not getting a tax increase.
Noticed more federal tax taken out of pension check. Did withholding go up? Yes. The withholding tables in effect 12/2009 were juiced to pass on the full year benefit of the Making Work Pay Credit in 6 or 7 months. The 2010 tables, which are less than the tables in effect 1/2009, spread the effect of the credit over the full year.Now, here's what matters for you. Although your withholding is affected by the credit you don't get the credit when you file your return. That means you could be as much as $800 underwithheld when you file your 2010 return. You may also see this problem on your 2009 return when you prepare it.PhilRule Your Retirement Home Fool
Thanks for the reply. Now I'm really upset that I, being retired, have to pay for someone else's credit. What happened to pledge of no new taxes?
Now I'm really upset that I, being retired, have to pay for someone else's credit.You seem to be confused. Your withholding has gone up, not your taxes. If your 2010 income is about the same amount and mix as 2009 you'll find that your 2010 tax is about the same as your 2009 was. If they did the mid-year adjustments to the withholding tables correctly last year, and they usually do, you'll find that your 2009 and 2010 refund/balance due will be roughly the same. In short, if you're not working, your taxes didn't go down, and they didn't go up.What happened to pledge of no new taxes? I hate to be the one to break it to you, but there's no tooth fairy either.PhilRule Your Retirement Home Fool
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