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A portion of a disability benefit is subject to federal and state income tax. When the benefit is calculated, SERS determines the amount that is taxable and the amount that is non-taxable. SERS sends this information to the disability benefit recipient.   [Read More...]

A disability benefit is taxable as ordinary income (replacement of wages or salary) under federal tax law until the recipient reaches minimum retirement age; then it is taxable as an annuity or pension. 

By January 31 of each year SERS sends each recipient a tax form (IRS Form 1099-R) for the previous calendar year which provides information on the benefit amounts received for the year, the amount of taxes withheld and other tax information.  With the Form 1099-R SERS sends the Recipient Income Tax Information pamphlet explaining the form and providing other detailed federal and state tax information. 

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SERS is required to withhold federal income tax from a monthly benefit amount unless a recipient elects in writing not to have any withholding. A recipient needs to complete and file an Internal Revenue Service (IRS) Form W-4P with SERS to instruct the retirement system on whether income tax should be withheld.   [Read More...]

If this form is not filed, SERS withholds as if the recipient had filed married with three withholding allowances.  The withholding can be changed at any time by filing a new Form W-4P which can be obtained from SERS.

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The SERS benefit amount may be subject to state and/or local taxes. A recipient should consult the appropriate tax department in the area in which the recipient lives to determine any obligations. For residents of Ohio, the SERS benefit amount is subject to state income taxes.   [Read More...]

SERS is not required to withhold amounts for state or local taxes.  For Ohio residents only SERS will withhold an amount for Ohio state income taxes if a recipient completes and returns an Ohio State Tax Withholding form, which can be obtained from SERS, indicating the specific amount to withhold.  This amount can be changed at any time by requesting a new form from SERS. 

You should consult a tax advisor, the IRS, or state or local tax departments for advice on any specific tax questions.  SERS cannot provide individual tax advice.

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