How the Stimulus Package Affects Retirement

If you’re retired or getting close to retirement, the stimulus package recently signed into law has a few perks in it that could benefit you a little bit. While much of the focus and discussion was on the infrastructure spending, there’s quite a few provisions in there for folks in or nearing retirement. It’s not as sexy to write about in mainstream media, it’s perfectly suited for all you loyal My Retirement Blog readers.

Social Security – $250 Tax Free

If you’re on Social Security right now, you will get a $250 tax-free payment from the government regardless of your income. If you’re a retired government worker who doesn’t get Social Security, you’ll get a refundable $250 tax credit, which is as good as $250 in your pocket. If you and your spouse are both collecting, you’ll each get $250. Not bad right?

Make Work Pay Credit

If you are working, even part-time, you may be eligible for a $400 tax credit ($800 for married couples filing jointly) for ’09 and ’10. The credit phases out if your income exceeds $75,000 ($100k if married) and is gone if your income exceeds $100k ($200k for married). Another gotcha is that you have to deduct the Social Security benefit if you get it, so if you get the $250, then you’re only eligible for $150.

There are other provisions in there that might affect you but these two are the most direct.