Understanding Taxes on Annual Leave Payout for Federal Retirees: Myth vs. Reality

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  • เผยแพร่เมื่อ 29 ต.ค. 2024

ความคิดเห็น • 8

  • @deemiles9484
    @deemiles9484 3 หลายเดือนก่อน

    Great information, thanks!

  • @keithoconnor6583
    @keithoconnor6583 3 หลายเดือนก่อน +1

    Good video, I’m retiring this year. I was going to go end of year. But I decided to go November 30th. It’s the last day of the month & last day of PP25. I will be also capped for the social security tax. So when I cash in my annual leave & my carry over. It won’t be taxed as much as it would be if I cashed it in the new year when SS not capped. Is that Rt? Not sure what the difference would be.

    • @planyourfederalretirement
      @planyourfederalretirement  2 หลายเดือนก่อน

      Correct. If you reach the 2024 Social Security wage base limit for your filing status before your annual leave payout happens in December 2024, then the annual leave payout would not be subject to the Social Security tax.

  • @TheEti1980
    @TheEti1980 3 หลายเดือนก่อน

    Good video! I am a FERS employee thinking about retirement January 2025 and will have 240 hrs leave. What I can't figure out is the date to retire to get the most benefit from selling my leave. I hear 15 January is a good day. Is the 240 hours paid based on increase (if any) for 2025? Thanks

    • @planyourfederalretirement
      @planyourfederalretirement  2 หลายเดือนก่อน

      The end of the Leave year for 2024 is January 11th, 2025. The beginning of the Leave year for 2025 is January 12th. This means that on January 12th, 2025, a maximum of 240 hours can be carried forward to the 2025 Leave year. We have yet to be aware of any legislative changes saying that the 240 hours that get carried forward will increase for 2025. A common retirement strategy among Federal retirees is to carry forward 240 hours of leave into the year they plan to retire, work that entire year, and retire 12/31 with the 240 hours of leave they carried forward from the previous year plus the entire year's worth of accruing more leave.

    • @TheEti1980
      @TheEti1980 หลายเดือนก่อน

      @@planyourfederalretirement Thank you. Do you happen to know if folks overseas can have more leave carry over such as 320 hours? I am stationed overseas and have the hire max leave and actually burning up some of my leave to get down to 320 hours before retirement. I plan to retire 25 January or should it be 26 January? Not sure which date to put on application because it will make a difference with leave accrual, benefits, etc. Thanks

  • @CCB249
    @CCB249 3 หลายเดือนก่อน

    What? This isn't true. Most people get taxed on bonuses at 22% tax rate because it is an easy calculation. Doesn't matter when you get that bonus-January, June or October. Your income tax rate at the end of year comes into play when you take in account all your income for the year-whether you will get a refund or have to pay more in taxes.

    • @planyourfederalretirement
      @planyourfederalretirement  2 หลายเดือนก่อน

      That is correct. Bonuses are taxed at the same ordinary income tax rate like your salary is. It doesn't matter when it is paid however sometimes it appears as though it is taxed higher because they are often paid at the end of the year. And as you mentioned, your marginal rate is determined by your total income for the year so the bonus could have the effect of putting you into the next tax bracket.