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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.


You are right. The bottom line of Schedule M should be a $250 credit. This was a lobbying triumph for NARFE (according to them) that got $250 payments out to everyone they could think of who wouldn't necessarily qualify for the MWPC.

My primary suspect is line 10 of Schedule M. I assume you answered that he received no $250 payment. I suspect the IRS thinks he did. If the return was e-filed it would bounce if IRS records disagreed with Schedule M. We've seen several cases where people are receiving no SS benefit but got the $250 payment. It seems that if you've ever been inducted into their benefit system there comes a point where you're there for life whether you ever get a penny from them. Every one of these people who we've sent back to their bank records has found the payment.

Call the special number, 1-866-234-2942. You need the taxpayer's SSN, ZIP Code from last filed return, and DOB. The system will tell you whether a $250 payment was made. Follow up as appropriate for the response.

Phil
Rule Your Retirement Home Fool
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