All or most of your TRS monthly benefit is subject to federal income tax, with exact details furnished to you at the time of your retirement. As required by federal law, TRS will withhold income tax on the taxable portion of your pension payment, unless you elect no withholding on IRS form W-4P. Should you elect no withholding, you may be responsible for payment of estimated taxes to the IRS, and could incur penalties under tax rules if your estimated tax payments are insufficient. You should consult your tax professional before electing “no withholding”.
Each January, you will be mailed IRS form 1099R, showing the total benefits paid for the previous year, the taxable amount, and any taxes withheld for the preceding calendar year. Form 1099R, along with information sent with your first retirement check is used in filing your annual federal income tax return.
For Georgia residents, your monthly TRS benefit is subject to Georgia income tax. TRS will withhold Georgia income tax from your monthly payment upon receipt of form G-4P. The 1099R you receive each January will also show the amount of withholding for Georgia income tax. Residents of other states should contact that state’s Department of Revenue to determine the tax status of their TRS benefit payment.