Do I understand the schedule right? Married couple, only husband works, they can get a credit of $800? Husband only makes $30,000. I thought both had to work to get the $800, but the form doesn't work that way. I was wrong?
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married couple
gets $800. Does not matter if both work, or it there are 3 or 4 jobs. The problems will be for the ones that do both work. They received about $600 reduction in withholding for the year each and only get $800 credit. So they will not get as much refund as expecting or could even pay. MFS each get $400.AJ, EA -
But wait! There's more....
Don't forget if the employees also happen to be drawing Social Security benefits, they already received a $250 rebate (real money!) there and that also has to be factored in using Schedule M.
Other posts have also mentioned the separate potential adjustment by the folks who received government retiree benefits IF that original service (= work) was not covered by FICA. (I don't expect to see many/any of those....)
That $800 potential credit just keeps shrinking like a Cheshire cat!
Rest assured, it is going to be a fun year in the Schedule M and Schedule L worlds! I'm really curious how much those "store front" operations are going to add to their charges for these forms!
FEComment
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My belief is that we will have MANY clients who will qualify for the special government
retiree credit of $250 each (who were not covered by FICA while working) such as retired teachers
and most government workers . And they will get this credit even if they have No earned income.Comment
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Retiree credit a rare bird here
What state are you in? I'm in NC and so long as I can recall all state employees and county employees and teachers DID pay into Social Security while they were working. Hence, no credit for them.Originally posted by dyne View Post
I believe there were some issues for certain long-time ("old") federal employees who had some working years "with" and some years "without" FICA payroll taxes.
In any case, I seriously doubt if I will encounter anyone that gets the government retiree credit. Also, IF a person qualifies have they not already received it (comparable to how Soc Sec recipients received the $250 bonus earlier in the year) ???
FEComment
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I have a handful of retirees who don't get SS, my Dad amoung them. Retired civil service and military before SS taxes taken.In other words, a democratic government is the only one in which those who vote for a tax can escape the obligation to pay it.
Alexis de TocquevilleComment
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Teachers
Be careful, FE. CT teachers don't pay into SS, and many retire to NC.Comment
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I have a few retired US Postal employees who will also qualify.Comment
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FEDUKE404: Thank you! I believe that you are right. I looked at a number of my clients who worked for the local schools, etc. and they ALL had FICA withheld last year. So we may NOT see many client who may qualify for the special credit for certain retirees. I am still concerned as to how we will KNOW for sure which clients will qualify. We can ask them, but they will probably not know. We can look at prior year W-2 forms IF available. From experimenting with the schedule M in my tax software it appears that such retires will be entitled to either $250 or $150 EACH. If they received the $250 Economic Benefit payment, the $250 retiree credit will be subtracted from the $400 (or $800) but further down on the schedule M he or she will be allowed a net credit of $150 for a single person. I do not
remember the amount of the net credit a joint return is filed.Comment
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Teachers in TX do not pay FICAOriginally posted by Lion View PostYou have the right to remain silent. Anything you say will be misquoted, then used against you.Comment
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So my question is this. For a federal civil service retiree not drawing SS because theyOriginally posted by dyne View Post
don't qualify for it, has he already gotten a payment of 250$?
I think the answer is yes, but I don't know.ChEAr$,
Harlan Lunsford, EA n LAComment
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No. the only way for a t/p to get the GRP (gov't retirement credit) is to file a tax return.Originally posted by ChEAr$ View PostYou have the right to remain silent. Anything you say will be misquoted, then used against you.Comment
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COMPLETE confusion exists!
I have found truly conflicting information on this topic - maybe someone can find the real statute?
Version A - Service (while working) must not have been covered by FICA. This would include the CT retirees (thanks Lion - I'll be on the lookout!) Government employees who paid FICA while working and became government retirees could not claim the credit.
Version B - If a "government" retiree is not collecting Social Security benefits, such as the case of early retirement, the credit is allowable. Many people could fall into this category.
I did find this statement on one web page:
"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."
and this
"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."
And then, what would you do for a CT government retiree who IS getting Social Security from a second job that was held for many years???
I'm sure the answer is out there.......gotta run for now!
FEComment
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My understanding is that a certain government retire who was NOT covered by FICA
WOULD qualify for the special $250 credit (or $500 for both spouses) on line 11 of
schedule M even though they may have worked under FICA at a DIFFERENT job
during their career. If they did receive the economic benefit payment of $250 for one
or $500 for both spouses, the credit for certain government retires on line 11 is
subtracted from the economic benefit payments. In such cases they will often wind
up with a net credit of $150 or $300 for both spouses. One scenerio in experimenting
with schedule M where the client filed a joint return, only one spouse received
a $250 economic benefit payment but BOTH spouses qualified as certain government
retirees ended up with a net credit on line 14 of schedule M in the amount of $550.
I expect there will be many errors reflected on the schedule M. When I first saw the
schedule M, I wrote a letter to IRS complaining about the complexity of the form.
IRS answered saying they were modifying the form to simplify it. You see the result.
The schedule M is incomprehensible.
What is the PURPOSE of schedule M? It is to allow a $400 or $800 credit to taxpayers
who earned more than $6451 single or $12503 on a joint return. But this potential credit
is reduced by $250 for EACH spouse who received the Economic Recovery Benefit
payment in with their social security payment. They will then be allowed a net credit
of $150 or $300 on line 14 of schedule M REGARDLESS of whether or not they qualify
for the special credit for certain government retires who were not covered by FICA.
So, WHEN does the special credit for certain government retirees matter? It only matters or
results in a net credit when the taxpayer did NOT have sufficient earned income AND did
NOT receive the economic benefit payment of $250 or $500. In such a case they will
be entitled to a net credit on line 14 of schedule M or $250 for one or $500 for both IF
both spouses qualify for the special credit for certain government retireesComment
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Fee for M
And what is your fee for sorting all this out and completing the Schedule M?
I haven't decided yet.Jiggers, EAComment
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