Q. Is any state free from federal tax on federal or military pensions? A. States having no personal income taxes include Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. Those that exempt the total amount of civil service annuities include Alabama, Illinois, Hawaii, Kansas, Louisiana, Massachusetts, Michigan, Mississippi, New York and Pennsylvania. Kentucky exempts civil service annuities only if the employee retired before Oct. 1, 1991; North Carolina only if the individual had five years of creditable government service as of Aug. 12, 1989; Oregon for those who retired before Oct. 1, 1991, with only a…
Browsing: income tax
Q. I am a Federal CSRS retiree. I have my FEHB insurance deducted from my annuity by OPM. Can I deduct my Blue Cross Blue Shield premiums from my federal income taxes? A. You can include the premiums on Schedule A of Form 1040; however, the amount wouldn’t be deductible unless your total medical expenses exceed your adjusted gross income by 7.5 percent for the year.
Q: Are the Federal Employees Retirement System and special retirement supplement annuities subject to federal income tax? If they are, and your FERS annuity is greater than $15,000, will the special retirement supplement be reduced? A: The special retirement supplement is subject to federal (and, where applicable, state) taxes. However, your special retirement supplement would only be reduced if you had earnings from wages or self-employment. The Social Security earnings test doesn’t count other sources of income, such as annuities.