Changes to Federal Tax Withholding

Public Law 111-05, The American Recovery and Reinvestment Act of 2009, was signed into law by President Obama on February 17th, 2009. This act authorized a tax credit for most workers including recipients of Retired and Annuity Pay. This tax credit will take the form of a reduction of your federal withholding tax rates. These new federal tax rates will be in place by April 1, 2009 for the payment of retired and annuity pay due on May 1, 2009. The new tables can be found at http://www.irs.gov/pub/irs-pdf/n1036.pdf .

Recipients of retired or annuity pay, who are not working and do not otherwise qualify for the Making Work Pay credit, may elect to submit a new W-4 to ensure that enough Federal tax is withheld to cover their overall income tax liability. The IRS has issued Publication 919 http://www.irs.gov/pub/irs-pdf/p919.pdf to assist taxpayers in adjusting their Federal income tax withholding for 2009.

If you wish to adjust your Federal income tax withholding, you must submit a new W-4 http://www.irs.gov/pub/irs-pdf/fw4.pdf . You may mail your completed W-4 to:

U.S. Military Retired Pay
P.O. Box 7130
London, KY 40742-7130

Or, you may FAX the new W-4 to 1-800-469-6559.