Income Tax Obligation
If you are a resident of Oklahoma, your TRS retirement benefit is subject to state income tax. You may exclude the first $5,500 received in TRS benefits from your state adjusted gross income in tax year 2004. Senate bill 435 by the 2005 Legislature increases the amount TRS retirees can exclude from their income on figuring their Oklahoma state income taxes to $7,500 for tax year 2005 and to $10,000 for tax year 2006, and thereafter. If you reside in another state, TRS retirement income will be subject to the tax laws of the state of residence.
How do I increase the federal taxes withheld from my retirement check?
You can change your federal or state tax withholding by completing IRS Form W-4P, Withholding Certificate for Pension or Annuity Payments, or by writing TRS to request a change. Simply indicate the new monthly deductions you want.
Will federal and state income taxes be withheld from my retirement check?
Federal law requires TRS to withhold federal income taxes unless you request no taxes be withheld. When you retire, TRS will explain your options to have taxes withheld and give you the choice to keep monthly deductions in accordance with applicable tax tables. Or you can specify a monthly amount to be deducted that differs from the tax tables. You can change the amount withheld from your check at any time by written notice to TRS. Notices received by the 15th of the month will be reflected in the retirement check due the first of the next month. If you elect no deductions or an amount less than your annual tax liability, IRS may impose a penalty and/or interest on the unpaid amount. Some retirees do not have monthly deductions taken from their retirement check because they make quarterly estimated tax payments directly to IRS. TRS will also withhold state income taxes for Oklahoma residents when requested. TRS cannot withhold state income taxes for other states.