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Employee group shows impact of proposed cuts on government services

Bigger tax bite

Many readers have called and written about increases in the amount of income taxes being withheld from their annuity checks and about the lack of response from the Office of Personnel Management to their questions.

We asked OPM to explain why this is happening now.

A spokeswoman referred us to an announcement on OPM's Web site that says the Internal Revenue Service "did not release the 2011 income tax withholding tables until mid-December 2010. OPM did not receive the tax withholding tables in time to apply them to your January 3, 2011 annuity payment."

Withholding tables are used to calculate taxes based on income ranges.

The OPM announcement says "the 2011 income tax withholding amounts have now been applied and will affect your February 1, 2011, payment and all subsequent payments in 2011."

An OPM fact sheet notes that "many individuals will pay more federal tax for 2011" because the Making Work Pay tax credit expired Dec. 31.

On the issue of customer service, OPM Director John Berry said the agency is hiring more people to deal with annuity-related issues.

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