Taxable lump sum payment for annual leave

0

Q. I am covered by FERS retirement and plan to retire at the end of 2014. I am a Wage Grade employee paid on a bi-weekly basis. Our 26th pay period for 2014 starts on December 28 of 2014 and ends on January 10 of 2015. I am considering my retirement date as December 31, 2014. My question is will my lump sum payment for annual leave be counted as taxable wages for 2014 or will it count in the 2015 tax year? Not completing the 26th pay period for leave credit purposes or full pay is not an issue. My only concern is in which year will my lump sum payment for my annual leave be taxed? I want to avoid having the lump sum payment counted as taxable wages in 2014. 

A. Your lump sum payment for unused annual leave will be taxable in the year it is received, which will be 2015.

 

 

Share.

About Author

Leave A Reply