Mike Causey

Tax Aftershocks

Are your still suffering the aftershocks of paying your taxes? Check out the Federal Report because you are not alone.

Federal News Network Staff

April 24, 2008 4:00 am

3 min read

Some self-defense experts say that if you want to attract attention, it is better to yell “fire” than to call out “help!”

Based on the reaction to Tuesday’s column, I would suggest you might get more attention by screaming out this one word: taxes.

How come? The column was about best places (from a tax standpoint only) to retire. Lots of people responded with questions, comments or helpful additions. For instance:

If you retire on CSRS the state of Oklahoma is doing a phase out of state income tax. In 2007 they exempted 20% of your CSRS retirement income, plus $10,000
In 2008 they will exempt 40% of your CSRS retirement income, plus $10,000
In 2009 they will exempt 60% of your CSRS retirement income, plus $10,000
in 2010 they will exempt 80%
in 2011 they will exempt 100% of your CSRS retirement income, plus $10,000 which can be applied to other retirement income. Charles.
Since you are based in the DC area, you should have listed DC as one of the “states” that exempts part or all of civil service annuities from taxes. The DC exclusion is $3,000 if you are 62 years of age or older. Not much, but better than nothing. Anon
In your list of states that exempt all or part of pension income, you did not list Maryland. Maryland allows retired feds (over the age of 65) to take a “pension exclusion”. For tax year 2007 the exclusion could be up to $23,600. The exclusion is reduced by Social Security benefits (which are never taxed in Maryland) but most CSRS retirees receive little or no Social Security benefits.
On a joint return, both the taxpayer and the spouse each can claim up to $23,600 on their own pension incomes. Stan

Learn about the government’s efforts to move away from storing hard copy records in our latest ebook, sponsored by Canon.

Look Before You Leap

One reader said the column was helpful up to a point. But he needs more information. The column said “check before you leap.” His question, “how and what, does one check?”

I tried researching this not long ago, but quickly bogged down just trying to find different states’ tax treatment of pensions. Do you know of any comprehensive guidance as there is for other fed-centric issues, such as Checkbook’s guide to choosing an FEHB health plan?

If there isn’t any, maybe the topic of a couple of future columns? It would be especially useful to hear the experiences of some retired feds who actually made the leap. Bob M.

Great question. One suggestion: Don’t limit your checklist to taxes. Think about weather, availability of health care, special insurance needs, local government and your neighbors. Many people say that unless you plan to retire to a long-held vacation home, it’s not a bad idea to rent someplace for 6 months. See what it’s like living there, not just visiting.

Probably the best advice is to check with people who have done it. People who have retired and who found a dream spot, or came home after six months. Got any advice? We’ll pass it on.

Finally, the column mentioned a friend of mine who moved from the DC area to the Washington-Oregon border. To which a reader said:

So what’s the answer to the Oregon/Washington scenario? Which side is more tax advantageous?

Read more: Mike Causey

Good question: Washington (where he lives) has no state tax. Oregon (where he shops) has no sales tax. For that he moved a couple of thousand miles, away from family and friends. In my mind he made tax avoidance his primary goal. Was he smart? Who knows.

Nearly Useless Factoid

A legacy of the USPS lives on in the form of the mailbag. Not just any mailbag, mind you. According to their website, “J.Crew has faithfully re-created the beautiful, oil-tanned mailbags carried by the US Postal Service from 1868 until the 1970s, when the original leather satchels were replaced by blue nylon bags.” Why this factoid is nearly useless: the price of the bag is $795.00 plus shipping and handling.

To reach me: mcausey@federalnewsradio.com