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US Govt OPM Survivor Annuity 1099 Taxable Amount

Forum|Forum|1 year ago
February 17, 2025
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My Mom has a OPM survivor's annuity and I've always done her taxes. Box 2a has always been UNKNOWN since my Dad's passing 11 years ago. TurboTax has always been confusing to me with regards to this pension. She gets regular monthly payments and I've always just reported everything she receives as RMD. I also just considered the full amount as the taxable amount. The questions seem to have changed this year...

- leave taxable amount in 2a blank

- TurboTax asks me a few questions later that they noticed I left it blank and that is OK

- TurboTax then asks if the Taxable Amount in 2a was used in years passed. I say no and it comes up with Simplified Method and General Rule. I've always chosen General Rule in the past and the full amount is populated by TurboTax OR I might have even put in the full amount in 2a. Have I screwed all this up over the years? FYI Mom is nearly 100 years old and my Dad probably started receiving the pension in about 1987 and my he passed in 2013 so it became a survivor's pension. I think when he was still living there was a formula used over a number of years which excluded a portion of his pension income but that was all used.

Best answer by AmyC

Your final sentence is the key, all basis used, then the whole pension is taxable. Just so you know, Serving those who serve states:

Once the total contributions are repaid, the entire annuity is fully taxable. How much of the annuity is in fact taxable depends on several factors, including which method is used (General or the Simplified Rule) and how many survivors (spouse and children) are receiving survivor benefits.

The Simplified Method can be used if the annuity starting date is after July 1, 1986. The method must be used by surviving annuitants if the annuity starting date is after Nov. 18, 1996. Under the Simplified Methods each of the survivor annuitant’s monthly payments is made up of two parts: (1) The tax-free part that is a return of the employee’s cost, and (2) The taxable part that is the amount of each payment that is more than the part that represents the employee’s cost. The tax-free part remains the same, even if the annuity is increased due to cost-of-living allowances (COLAs).

AmyCAnswer

Employee

Your final sentence is the key, all basis used, then the whole pension is taxable. Just so you know, Serving those who serve states:

Once the total contributions are repaid, the entire annuity is fully taxable. How much of the annuity is in fact taxable depends on several factors, including which method is used (General or the Simplified Rule) and how many survivors (spouse and children) are receiving survivor benefits.

The Simplified Method can be used if the annuity starting date is after July 1, 1986. The method must be used by surviving annuitants if the annuity starting date is after Nov. 18, 1996. Under the Simplified Methods each of the survivor annuitant’s monthly payments is made up of two parts: (1) The tax-free part that is a return of the employee’s cost, and (2) The taxable part that is the amount of each payment that is more than the part that represents the employee’s cost. The tax-free part remains the same, even if the annuity is increased due to cost-of-living allowances (COLAs).

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johkar1Author

Thanks for the informed reply. I guess I've been doing it right treating it as fully taxable regardless of the consistency of how I achieved it in TurboTax. TurboTax could be a bit clearer.