Q: At the start of 2011, my taxes for my FERS retirement went up about $100. Imagine my surprise. It was right after reinstituting the Bush tax cuts. Why?
A: The Making Work Pay tax credit expired Dec. 31, 2010. As a result, many retirees saw an increase in the amount of federal tax being withheld from their monthly annuity payments. The tax withholding tables published by the IRS were adjusted to provide for the correct withholding amounts without this credit.