As part of the Federal 2009 Economic Recovery Tax Law, taxpayers, including U.S. Virgin Islands residents, could be entitled to two tax credits on your 2009 federal income tax return, the “Making Work Pay Credit” and “Government Retiree Credit”.

All employed taxpayers should have noticed an increase in their take home pay starting in early Spring 2010, by way of a change in your withholdings, which would equal $400.00 for single filers and $800.00 if filing jointly. This amount will be reported on your 2009 income tax return on Schedule M or the back of Form 1040 EZ. This is the “Making Work Pay Credit”.

Tax credit number two is the “Government Retiree Credit”. If you received Social Security, Veterans or Railroad Retirement benefits, you were eligible for a $250.00 payment, $500.00 if both spouses were eligible. The Social Security Administration would have direct deposited or mailed you the $250.00 check in early Spring 2009.

Now, here comes the important part; if you are eligible for both credits, you must deduct the Government Retiree Credit from your Making Work Pay Credit on  your 2009 return. Can’t remember if you received the Government Retiree Credit? Simply logon to look to the left side of the screen to where it says “Check whether you received an Economic Recovery Payment”, click on that and enter the necessary information, Social Security number, date of birth and zip code. Or, if you prefer you can call 1-866-234-2942 and  select option #1.

Why do you need to check and not the IRS, you wonder? The Social Security Administration was the agency that sent the checks, not the IRS. 

Harris R. Angell, Jr. is an attorney with BoltNagi PC and concentrates his practice in tax and corporate law. BoltNagi PC is a full service business law firm in St. Thomas, Virgin Islands.