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.
A. You can find the methodology for determining the portion of your annuity that’s tax free at http://www.irs.gov/publications/p721/index.html, the Internal Revenue Service’s Tax Guide to U.S. Civil Service Retirement Benefits.
