Saturday, January 30, 2010

Do You Qualify for the Government Retiree Credit?

You may have heard about the Government Retiree Credit and wondered if all retirees qualify. The name sounds like it could be a credit FROM the government FOR retirees, right? Wrong. It’s actually a credit specifically for certain folks who are retired from government service. And not just any government service qualifies – it has to be service that was NOT covered by social security.

The one-time, $250 credit per eligible retiree is part of the American Recovery and Reinvestment Act of 2009. In order to take the credit, a retiree must:
  • Have received during 2009, a government pension or annuity for service not covered by social security.
  • Have a valid social security number.
  • Attach a completed Schedule M to the 1040 or 1040A tax return for 2009.
Please note that this credit is refundable. This means that you may get the money even if you didn’t pay tax in during the year or owe taxes now. You can’t take the credit, however, if you got the $250 economic recovery payment during 2009. And if you also receive the Making Work Pay Credit, the amount will be reduced by the amount of your Government Retiree Credit. Are you confused yet?

For more information, check out the IRS website. The easiest thing to do, however, may be to just fill out a copy of Schedule M, following the instructions for each question, and see what it says at the end. Doing so should clearly show whether or not you qualify.


  1. what the hell does "service not covered by social security" mean?

  2. Employees of some government agencies are covered by an alternate pension plan and do not pay into Social Security. This service, therefore, is NOT covered by social security and earnings from this service are not used when calculating social security benefits.

    The Social Security website states, ". . . not all state and local employees are covered by Social Security. Some are covered only by their public retirement pension program . . . " (SSA Publication No. 05-10051, June 2007)

    Schedule M, line 11 asks, "Did you (or your spouse, if filing jointly) receive a pension or annuity in 2009 for services performed as an employee of the U.S. Government or any U.S. state or local government from work not covered by social security?"

    To receive the Government Retiree Credit, the answer must be “yes” and the retiree must not have received an economic recovery payment in 2009.