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I did a tax return for a friend who is retired from the federal government and who receives a pension from OPM. He was CSRS, not FERS, and his 30+ years of government service was not covered by social security. He also works as a consultant, and his joint income exceeds $200K.

His return was accepted without question, but his refund came up short $250. He subsequently got a letter from the IRS, saying that they had adjusted his refund, and inviting him to call or write if he had questions.

Well, he did call, and the IRS person he spoke with told him that with AGI > $190K, he didn't qualify for the Govt Retiree credit. Now he has earned income, and I realize that his AGI is too great for him to to receive the Making Work Pay credit, which is phased out at $190K. But I can't find any language, anywhere, to suggest that the Govt Retiree credit is phased out as well.

My friend isn't terribly upset about the $250 - he hardly needs it - but I'm greatly puzzled as to the result. Am I missing something?

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