Q. I am a FERS employee wanting to retire on Dec. 31, 2017, with 35 years of service and 425 hours of annual leave with which to take as a lump-sum payout. Since the pay period ends in and the actual pay date is in January 2018, will my payout be counted as income for 2017 or 2018?
A. Lump-sum payments for annual leave are taxed in the year they are received, which in your case will be 2018.
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Is the lump sum annual leave paid out with a separate dispersment or is it combined with the last regular paycheck?
It’s almost always a separate payment.