Retired Workers and the 2009 Recovery Act

The American Recovery and Reinvestment Tax Act of 2009 (2009 Recovery Act) includes provisions that benefit certain retired workers. Individuals who receive certain government pensions and annuity payments will receive a $250 credit in 2009. Alternatively, economic recovery payments of $250 will be made to individuals who are eligible for certain social security benefits, Railroad Retirement benefits, veteran's compensation or pension benefits, or supplemental security income (SSI) benefits. These provisions are coordinated with each other and with the "Making Work Pay" credit so that no individual receives a double tax benefit.

The $250 economic recovery payment is payable to eligible individuals within 120 days of February 17, 2009, the date of enactment of the 2009 Recovery Act. Eligible individuals are those who received benefits in a qualifying program during November 2008, December 2008, or January 2009; and who have an address in the United States or its possessions. A qualifying program includes:

Title II benefits under certain provisions of the Social Security Act,

Monthly annuity or pension payments payable under certain provisions of the Railroad Retirement Act of 1974,

Certain veteran's compensation or pension benefits, or

Supplemental security income (SSI).

Government retirees may qualify for $250 credit for 2009. Some government retirees may not qualify for social security benefits, and therefore may not be eligible for the economic recovery payment. However, the 2009 Recovery Act includes a $250 credit for certain government retirees who receive an annuity or pension for service performed in the employ of the United States, any state, or instrumentality thereof.

Individuals who receive an economic recovery payment may not claim the credit for government retirees. In addition, if an individual is also eligible for the Making Work Pay credit (MWPC), the amount of the MWPC is reduced by the amount of the economic recovery payment and coordinated with the credit for government retirees.

Tax laws can be overwhelming so our office is here to help you get the highest possible tax benefit you can from these new laws. If you have any questions on how, or if, you qualify for one of these tax benefits, please call our office at your convenience at (214) 827-9118.

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