Back in October, we published a column entitled $250 Tax Credit or Payment for Federal Retirees.
The gist of the column was this: 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. We did not say it would be easy to get the money.
Social Security, Veterans, SSI or Railroad Retirement beneficiaries, who are not otherwise wage-earners, will see a one-time $250 increase in their payments so they will not get a tax credit.
The article on tax credits for federal CSRS retirees was read by a large number of people. Many of them, judging from the email queries we have received, saved a copy of the article are now wondering if the article was true because they have not heard anymore about how to get the $250.
So, for those who are wondering, here is the answer.
Most people will need a copy of Internal Revenue Service form M in order to apply for the government retiree credit. In effect, the credit is refundable. In the arcane language used in our complex tax system, the government will pretend you made a payment of $250 and entitled to a refund of that payment. In effect, Uncle Sam will issue a refund even if you had no tax withheld from your pension.
You can get a copy of Form M from the IRS.gov website (somewhere) or you can download it here.
If you think this is complex, you are not alone. The Commissioner of the Internal Revenue Service says he does not fill out his own tax return because of the complexity of our tax code. In fact, most Americans do not fill out their own tax return because it is not decipherable to those who have not made a career out of studying it and the penalties for not doing it correctly can lead to serious problems.
How complex is our income tax system? In 2004, there were 529 separate IRS tax forms. There are more than that number today. Taxpayers and businesses in the United States spend 7.6 billion hours a year complying with tax-filing requirements. A recent report from the National Taxpayer Advocate’s office estimates US taxpayers spend $193 billion a year trying to comply with income tax requirements.
Tom Daschle, former chief lawmaker in the Senate, withdrew his Cabinet nomination because of an "unintentional" $128,000 tax mistake. Rep. Charles Rangel, chief tax-writer in the House, is entangled in how own tax evasion problems as is Tim Geithner, the Treasury secretary.
In short, I anticipate many readers will have questions about their individual tax situation and how this will impact their receipt of the $250 tax refund.
You will need to direct your questions of the person preparing your taxes.