Ask The Experts: Retirement

By Reg Jones

Maximum earnings

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Q. You recently answered a question regarding the maximum earning amount for 2014 is $15,480 before the Social Security benefit would be reduced. Does the SSA consider military retirement, VA disability pay, along with TSP disbursements as “earnings”?

A. Those aren’t earnings. Earnings are income received from wages or self employment.

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Annuity taxes

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Q. I’m a recent federal retiree and I’m trying to project my income for the year. Is the starting point for the taxable portion of my monthly annuity the amount before or the amount after the survivor’s benefit is deducted? From what I gather from IRS Pub 721, the deduction is a pre-tax deduction, but it lowers the tax-free portion amount of my monthly annuity. Is this correct? Read the rest of this entry »

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TSP and taxes

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Q. I intend to make a lump-sum payment this year to pay off the balance owed to recapture my military service for inclusion of this time toward my FERS retirement. I am paying it with after-tax dollars I have saved. Can this amount be claimed as a tax credit or claimed as a tax deduction? Which document says what can be claimed or that neither can be claimed?

A. No. It can neither be claimed as a tax credit nor a tax deduction.

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Civil Service Retired tax question

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Q. My father retired from civil service in 1987.  Box 2a “Taxable amount” on his form 1099-R says the taxable amount is “unknown.”  My tax program asks for an amount.  How do I find out what the taxable amount is? Read the rest of this entry »

11 questions on military buyback

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Q. 1. How are the days of active-duty service calculated?

2. Is that a one-to-one credit added to years of service?

3. Can you buy it back after you retire and adjust the annuity accordingly?

4. Can you buy back portions of it?

5. Can you pay in installments?

6. What percentage of military pay per year would you get in retirement? For CSRS, it is roughly 2 percent based on high-3; would it be calculated on actual salary back then or adjusted for inflation?

7. Any chance for a retroactive payment once established?

8. Will I lose any benefits if I do this?

9. Can I do this if I was not in the military long enough to earn a pension?

10. How does Social Security fit into this picture?

11. Can I get all three (FERS/CSRS, Social Security, military/Defense Department) separately? What is the penalty for collecting multiple pensions if done separately?

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W-2 or 1099?

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Q. I retired from the federal government in late 2012. This is my first full year retired. Will I receive a W-2? Or is the 1099 used instead?

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State taxes

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Q. I am going to be a retired CSRS employee. The Postal Service does not take state taxes out of the CSRS retirement check. How do I go about paying my state taxes?

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39 quarters

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Q. I am 61 years old and have been retired from the fire service. I have, according to Social Security, 39 units which were not earned at fire service. If correct, I need one unit to earn Social Security at age 62, and I need this unit also to be eligible for Medicare at age 65? Is there any other way to get this one quarter other than going to get a job for three months?

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Insurance premium and tax deduction

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Q. I am retired and collect an annuity from the government. I also pay a monthly premium for insurance. Is the premium deductible along with any other out-of-pocket costs that I can claim on my income taxes?

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FERS redeposit and taxes

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Q. My wife left her government job a number of years ago and withdrew the money from her FERS account. She re-entered government service a few years ago. She then requested the redeposit amount required to bring her FERS account whole again. To make her FERS redeposit payment, she took a withdrawal from her IRA.

We received a 1099-R from her IRA firm showing the withdrawal and we will need to report on our taxes as income. Since the money went back into FERS, can I deduct that amount as if it were being rolled over into an IRA?

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Survivor benefits and taxes

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Q. I retired from CSRS in 2005 at age 57 and 32 years of service. I elected to provide survivor benefits to my spouse at retirement (55 percent). We were divorced Sept. 16, 2013. However, I have elected to continue to provide survivor benefits for her. Are those survivor benefits tax deductible?

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Change of address for Form 1099

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Q. I moved to another state and need to change my address and state tax distribution. Unable to contact them by phone.

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Disability retirement

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Q. I’m 52, and I’ve been on FERS disability retirement since I was 47. My minimum retirement age is 56. Is it true that they’ll stop withholding federal income taxes on my pension when I reach my MRA? Is it also true that I’ll be switched to regular retirement when I reach my MRA, and not when I reach 62?

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Social Security

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Q. My husband is a retired federal employee receiving a CSRS pension. I have been paying Social Security taxes based on my own employment earnings since before we were married.

1. As the wife of a federal employee who is receiving a federal pension, will I receive my full Social Security benefit when I reach retirement age?

2. If I outlive my husband, how much of his federal pension would I receive, and would I also continue to receive my full Social Security?

3. Will he receive Social Security benefits based on employment earnings in nonfederal jobs he held prior to and after his federal employment?

4. If, as a retired federal employee, he will never be eligible for Social Security benefits, should he be paying Social Security taxes — which he has in the past and is doing in nonfederal jobs?

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Special retirement supplement and Form 1099R

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Q. I retired from the Postal Service last year and, when I received my CSA 1099R, it has my FERS annuity and my special retirement supplement taxable amount combined. If the supplement is taxed like Social Security, which is different from my FERS annuity, why are they combined on my CSA 1099R, and how do I separate the two on my tax Form 1040A? My gross income will be over $44,000 and, from what I have been reading, at that amount, I should only be taxed on 85 percent of my supplement. Is this correct?

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State taxes

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Q. When I retire under CSRS, I will not have state taxes taken out of my check. How do I know how much to pay the state? Do I pay quarterly or yearly? Where do I find the information?

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Military buyback and taxes

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Q. I was active-duty military for 10 years. I bought back this time in one lump sum of cash from my civil service job. I fall under FERS. I would like to know if that contribution to buy back my time is considered a pension/retirement contribution and can be claimed on income tax calculations.

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Getting the 1099R

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Q. How does a retired federal employee receive a 1099R from the Office of Personnel Management? A recent notice from OPM stated they will not be supplying 1099R through the mail as in the past. They suggest that you go on a computer with a user ID and OPM-assigned password. I have called OPM at least 45 times in the past two days and received only a busy signal. I cannot get to OPM to find a password or user ID.
Some older employees do not have computers or the knowledge to operate a computer. I worked at Puget Sound Shipyard and assisted many employees with just filling out forms, Many did not finish high school. I have no idea on how they will get the information. Some employees could not read or write. If they must purchase a computer and WiFi, does it become a deduction for reporting to the Internal Revenue Service?

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WEP and taxes

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Q. I am having half of my Social Security benefit reduced because I have a CSRS retirement and I earned enough Social Security credits separately for a Social Security benefit because of Army Reserve service.
Will the amount of my Social Security benefit be reduced because of the windfall elimination provision? Will it can count on my IRS Form 1040 as taxes paid or a deduction?

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CSRS annuity and taxes

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Q. My accountant, a CPA, has a question about the Form W-4P (withholding Certificate for Pension or Annuity Payments) where it states to put down the “additional amount, if any, you want withheld from each pension or annuity payment.” He is asking me to tell him how much of my monthly pension payment is not taxable. My human resources specialist has given me a federal retirement benefits estimate if I retire from the federal government March 3. My total CSRS annual net retirement annuity is estimated to be $128,412, and my monthly annuity after health insurance premiums are deducted is estimated to be $10,701. How much of that monthly net pension is not taxable?

It is my understanding that my cumulative CSRS retirement contributions, which are listed on my civilian leave and earnings statement are my after-tax contributions to my retirement.

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