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Taxes
Income Taxes
Your retirement benefit is subject to federal income taxes as well as state income taxes if you live in a state that taxes income. The exception is if you retired under the guaranteed benefit formula for work-related disability.
If you live outside Virginia, contact your state’s taxation agency for information on state income taxes.
Imputed Income
If the value of your Basic Group Life Insurance is more than $50,000, the value of the amount over $50,000 is subject to income and FICA taxes. VRS automatically withholds these taxes and provides information to you every year on a W-2.
Tax Information for Retired Public Safety Officers
If you are a retired public safety officer, you may be able to exclude up to $3,000 per year from your retirement income used for qualified health insurance premiums or long-term care insurance premiums. Premiums covering yourself as well as your spouse and/or dependents are eligible for this exclusion.
Your 1099-R form shows the amount of health insurance premiums VRS deducted from your monthly retirement benefit, less any health insurance credit you may have received. To find out if you are eligible for benefits under the H.E.L.P. Retirees Act, consult a tax advisor or read the IRS Form 1040 Instructions for 2007. IRS Publication 575 also provides tax information concerning retirement and annuity income.
myVRS Income Tax Tool
An income tax calculation tool available through myVRS for Retirees allows you to submit tax withholding changes online. After you submit the changes, your account is updated automatically to reflect the changes. You also can use the tool to see the most advantageous tax withholding for you before you make changes.
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