Browsing: Tax

Q. I’m going to retire and will receive a lump-sum payment for my unused annual leave. How is that payment calculated? Is it accumulated hours x current hourly wage? Is this considered unearned income? How is it taxed? A. Your lump sum annual leave payment would be based on the hourly rate of basic pay you would have received if you had remained on the job. If you retire before an annual pay adjustment becomes effective, any hours before that change will be computed at the old rate and those after the change at the new rate. Any step increase…

Q. I’ve just received a large civil penalty from a state. Can they garnish my Social Security benefit when I become eligible for that benefit? A. It all depends. Section 407 of the Social Security Act states that “none of the moneys paid or payable under this subchapter shall be subject to execution, levy, attachment, garnishment or other legal process.” However, there are exceptions, such as the collection of delinquent federal taxes or delinquent child support. You should consult an attorney who can determine if your benefit can be garnished.

Q. I have eight years active. I’m going to buy my time back; however, it will not be paid off within the three years. How much interest will accrue on the balance after that third year is over? Also, I am at 90 percent with the Department of Veterans Affairs. When I retire, will I have to give up my VA disability or does that only apply to retirement pay?

Q. I have read conflicting views on whether the Voluntary Separation Incentives Payments (VSIPs) and annual leave payments are subject to the earnings test. Other sites report under Office of Personnel Management rules monies you earn in the year in which you retire are not subject. Does this mean if I retire in March and lump sum payment for annual leave and a VSIP is paid that year, it does not count against my supplement?

Q. Why wouldn’t the Office of Personnel Management give you an option to have taxes withheld if a survivor annuity is taxable? What a huge shock to find out that I owe $6,000!

Q. I am a FERS retiree. My total retirement contribution that’s been taxed is $16,000. I understand this is averaged through my mortality and have a portion every month, tax free. Is there an option where I can take the total $16,000 and apply all in a given tax year as tax free even though that will eliminate the monthly, tax-free amount?

Q. My wife in the 1980s, for about two years, worked full time as a registered nurse at the VA in West Haven, Connecticut. My understanding is that she may be entitled to some sort of retirement-related benefit (albeit small) as a result of working there. She shared with me that some tax was deferred to another federal mechanism — for lack of a better term. Any thoughts on where to start looking?

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