Do I have to pay tax on accrued annual leave payments?
If you are a federal employee and receive
a lump sum payment for accrued annual leave
when you retire or resign, this amount will be included as taxable income on your
Form W-2 and must be reported on your tax return.
If you resign from one agency and are re-employed by another agency, you may have
to repay part of your lump sum accrued annual leave payment to the second agency. You can reduce
gross wages on your tax return by the amount of accrued annual leave you repaid in the same tax year in which you receive it. You
should attach to your tax return a copy of the receipt for the repaid accrued annual leave
or a statement furnished by the
agency to which repayment of the accrued annual leave is made to explain the difference between the wages on the
IRS tax return and the wages on your Form W-2.
Related tax
information about accrued annual leave
IRS publications about accrued annual leave: See IRS Publication 17,Your
Federal Income Tax.
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For further information regarding IRS
rules and regulations and your particular tax or IRS situation you should
consult with a Certified Public Accountant, Enrolled Agent, Attorney, or
other tax advisor.
Your
Federal Income Tax.
