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Clearing the Fog From Retirees' Rebates

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By Stephen Barr
Friday, March 21, 2008

Tax law is difficult to understand, and tax rebates are not easy to grasp either -- for the general public or for federal retirees.

This year's economic stimulus law does not count income from pensions for determining eligibility for rebates, and the law's omission of the Civil Service Retirement System and the Federal Employees Retirement System has created some confusion for government retirees.

"We've been getting a lot of calls," said Dan Adcock, assistant legislative director at the National Active and Retired Federal Employees Association, based in Alexandria.

Most federal retirees, though, should be able to qualify for a rebate under this year's stimulus package. According to the Internal Revenue Service:

Retirees who file a tax return and usually owe taxes will be eligible for rebates.

And retirees who do not pay taxes but have at least $3,000 in income from self-employment, wages, Social Security or certain types of railroad and veterans benefits also can expect rebates.

Because the government's contribution to a federal pension is taxable income, many government retirees file tax returns and will probably qualify for the tax rebate.

The average annual pension payment in the Civil Service Retirement System is $31,752, and the average annual annuity in the Federal Employees Retirement System is $11,544. The latter system also provides a Social Security benefit.

Under the stimulus law, rebates phase out for individuals with adjusted gross incomes of more than $75,000 and married couples who file a joint return with incomes of more than $150,000.

Most taxpayers will receive rebates of up to $600 ($1,200 for married couples), and parents will receive an additional $300 for each eligible child younger than 17.

Federal retirees who do not file tax returns must submit a 1040A form to obtain a rebate, assuming they can show at least $3,000 in qualifying income. Rebates for low-income retirees will range from $300 to $600.

Supplemental Security Income, a Social Security program that assists the disabled or people with limited income, does not count as qualifying income for the rebate.


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