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Andrew J. Errato, CPA, ABV, CFF, CVA, MST
David Y. Bailey, CPA
Dominic Scarano, Jr., CPA
Michael E. Bailey, CPA, MST
Michael J. Schaefer, CPA (Retired)
Alan P. Bailey CPA, (Retired)
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This web site is designed to introduce you to our firm and provide you with information that is critical for the success of your business.
As a full service accounting firm, we are dedicated to providing our clients with a complete range of auditing and accounting, tax services, business valuations, estate, gift & trust taxation, and business advisory services. Our firm provides something that is often missing in today's hectic business environment…personal attention. The letters CPA may stand for Certified Public Accountant but in our firm they signify Close Personal Attention.
Thank you for visiting us at BSE! |
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IRS issues withholding adjustment option for pension plans to offset Making Work Pay credit The IRS has announced a new withholding adjustment option that allows pension plans to adjust withholding in order to offset the Making Work Pay credit. This option was made in response to concerns voiced by pension plans and tax practitioners. The withholding method is optional, however, and pension plans are not required to use it. They may choose to continue using the revised withholding table. Making Work Pay credit The Making Work Pay credit provides a refundable credit of 6.2 percent of earned income, up to $400 for single taxpayers and up to $800 for married couples filing jointly. Technically, the annual credit is claimed by taxpayers when they file their 2009 and 2010 federal income tax returns. However, it is being delivered in increments through reduced payroll withholding in 2009 and 2010 because Congress wanted to accelerate the credit to help stimulate the lagging economy. Since pension income is not earned income, many retired taxpayers had been in danger of being under-withheld based on mandatory withholding tables that have the Making Work Pay credit built in. Optional additional withholding calculation The method for calculating optional additional withholding amounts for pension payments are found in Tables in Notice 1036-P, Additional Withholding for Pensions for 2009. The withholding amounts may be added to the amount of withholding determined from the (1) percentage method, (2) wage bracket method or (3) any other allowable method. Combining one of these three methods with the IRS's procedure qualifies as an allowable alternative withholding method for pensions and annuities, according to the IRS. Note. Pension recipients may have already submitted Form W-4P, Withholding Certificate for Pension or Annuity Payments, to adjust their withholding. The IRS therefore suggests that pension plans contact these individuals to determine if they still want the additional withholding. Additional candidates for adjusted withholding Along with pension recipients, individuals with more than one job and married couples whose combined income puts them in a different tax bracket may want to adjust their withholding as well in order to offset the Making Work Pay credit. Others who may also need to adjust their withholding include: dependents who work but are ineligible for the credit due to their dependency status, non-resident aliens, some resident aliens, and those who do not have a valid Social Security Number (SSN) and who are ineligible for the credit. |
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