There have been a lot of changes in the past few years regarding the tax laws. One change includes the Job Creation Act of 2010, which was part of a package designed to help stimulate the economy into new growth. These changes affected the money people earned in 2011 with some of the affected areas being in worker’s gross pay and people’s pensions checks.
When creating new laws during the 2010 tax period there were also several credits that were cut including the making Work Pay credit. The various credits were extended to people who were actually employed during the year and not to those who were retired unless they had collected some form of income.
To help increase the amount of money an employed worker could take home the tax relief Act was created. This reduced the percentage of money that was taken out of a wage earner’s check for social security. This new act did not apply to people receiving pensions.
Even though the laws were created and placed into effect in 2010 they came so late in the year that they did not apply to the previous year’s taxable income. Most employees will not see the changes until they receive a paycheck in February of 2011.
Even though the amount of money withheld for social security will be less there will not be any changes made in other amounts withheld for services such as medicare.
For people receiving pension checks there usual allotment may be lowered depending on the plan used to calculate their amounts. The IRS has published several helpful guides for people who want to understand more about how these changes will affect the money they receive.
It is important for both retired individuals and those who are actively employed to review all of their financial statements pertaining to their withholdings every year to make sure they understand what changes pertain to them.