$250 Tax Credit or Payment for Federal Retirees

Now that the economic stimulus package has been passed into law, the bill has actually been printed and organizations and going through it to find out what this new law contains. Federal retirees will be eligible for an additional $250.

Now that the economic stimulus package has been passed into law, the bill has actually been printed and organizations and going through it to find out what this new law contains.

One organization that has been working on the bills in Congress is the National Active and Retired Federal Employees Association (NARFE). I received a press release from the organization this week with the headline "NARFE SCORES LEGISLATIVE WIN FOR FEDERAL RETIREES IN STIMULUS PACKAGE."

In the release, the organization wrote that NARFE was announcing "successful achievement of a legislative fix that ensures that all federal retirees–like other seniors–will be offered stimulus relief."

"Under the auspices of the stimulus package, tax relief via reduced payroll tax withholding will be provided to wage-earners under the ‘Make Work Pay’ provisions.  Social Security, Veterans, SSI or Railroad Retirement beneficiaries, who are not otherwise wage-earners, will see a one-time $250 increase in these payments.  Federal retirees who are not eligible for any of these payments will be eligible to take a newly-created $250 per person refundable tax credit."

This is what this means for most readers. If you are a FERS retiree and collecting Social Security payments, you are eligible for an additional $250 payment. If you are under CSRS, you are not collecting Social Security. However, you are eligible to receive a tax credit of $250.

I did not doubt the credibility of the NARFE announcement but wanted to find it in the stimulus bill. That is not an easy task–even with a computer packed with a big hard drive and a lot of memory.

But, with patience and determination, I located the provision buried deep within the 1100 or so pages of this legislative monster.

Go to section 2202. It has the intriguing title of "Special Legislation for Certain Government Retirees."

Here is what it says: In the case of an eligible individual, there shall be allowed as a credit against the tax imposed by subtitle A of the Internal Revenue Code of 1986 for the first taxable year beginning in 2009 an amount equal $250 ($500 in the case of a joint return where both spouses are eligible individuals).

An eligible individual is a person "who receives during the first taxable year beginning in 2009 any amount as a pension or annuity for service performed in the employ of the United States or any State, or any instrumentality thereof, which is not considered employment…."

The Senate stimulus bill originally provided a one-time cash payment to Social Security, Veterans, Supplemental Security Income (SSI) and Railroad Retirement recipients that excluded non-Social Security public sector retirees –including many Civil Service Retirement System (CSRS) annuitants, as well as certain state and local government retirees. "NARFE’s efforts, which included reaching out to legislators on Capitol Hill and to groups representing state and local government employees and retirees, secured language being incorporated into the final bill to accommodate these individuals."  

So, for those readers who are retired, you will have an extra $250 to stimulate the economy.     

About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources. Follow Ralph on Twitter: @RalphSmith47