Q: I retired from the Federal Government on 1/03/2013 and I need to know how my federal tax is calculated. I was told that my retirement is not taxable up to the amount that was contributed. Is this correct? When I retired, I was not advised.
A: Correct. However, you receive your already taxed contributions back bit-by-bit based on your life expectancy. This means that the bulk of your retirement will be taxed. Because you are CSRS, expect around 85% of your retirement to be taxable and 15% to be tax free. OPM will send you a 1099 in January that will tell you how much you need to report on your federal income tax.
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