The Office Of Personnel Management issued the following anouncements:
Annuitant Federal Tax Withholding Increase
On December 16, 2010, Congress elected not to extend the “Making Work Pay” credit. The “Making Work Pay” credit, part of the 2009 Stimulus Package, expired on December 31, 2010. This could mean higher federal tax withholding amounts in monthly annuities for federal retirees. The Internal Revenue Service (IRS) issued a notice in December 2010, stating withholding tables for 2011 would no longer be adjusted for the Making Work Pay tax credit and there is no longer an optional additional withholding adjustment for annuities. The adjustment is reflected in the Notice of Annuity Adjustment received by annuitants in January 2011.
With the expiration of the temporary credit, IRS tax withholding tables have changed for 2011 and many retirees may see an increase in the amount of federal tax being withheld from their monthly annuity payments as a result. OPM uses tax withholding tables that are provided by the IRS and questions about changes to those tables must be referred to the IRS, not OPM. The tax rates did not change; only the withholding tax table changed. For more information concerning the 2011 federal tax withholding tables go to www.irs.gov. See IRS Notice 1036, TABLE 4-MONTHLY Payroll Period.
You may change your federal tax withholding by accessing www.opm.gov/retire or calling OPM at 1-888-767-6738 from 7:30am to 8:00pm EST. There is a federal tax calculator on our website that may assist you in determining the amount of federal tax to withhold. Changing the amount of your withholding will not reduce your tax liability at the end of the tax year. You may also want to consider contacting your tax advisor.
Important information about your February 1 annuity payment
The Internal Revenue Service (IRS) 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.
The 2011 income tax withholding amounts have now been applied and will affect your February 1, 2011, payment and all subsequent payments in 2011. You will receive a Notice of Annuity Adjustment in late January 2011 describing the February 1, 2011, payment, including information about any new income tax amount withheld from your annuity.
Please note that the tax rates did NOT change; only the withholding table changed.
The amount withheld from your annuity could change because:
- Your annuity amount changed.
- The withholding tables changed.
- You asked OPM to make a change.
For information regarding Federal income tax, please visit the IRS website at www.irs.gov.