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Tax Information

Tax Reporting

Tax statements, including 1099s, are mailed to retirees no later than January 31 for the previous tax year and a printable image is made available online in mid-February in your secure myASRS account.

For those retirees whose premiums are deducted from their ASRS pension, you can view your total out-of-pocket health insurance costs for the previous tax year by logging in to your secure myASRS account. Go to 'Payment History' and select the proper tax year to view the year-to-date totals.

Log in to see your year-to-date totals and, after February 15, your new 1099R. You can also edit your tax elections online as well:

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How to Withhold Arizona and/or Federal Income Taxes

There are two ways members can withhold Arizona and/or federal income taxes:

    • Members may file quarterly estimate forms (contact the IRS for the appropriate forms) and not have any federal or state tax withheld from their monthly pension, or
    • Members may elect to claim a number of allowances and have an additional amount withheld from each pension check. Log in to your myASRS account to make changes at any time, and they will become effective in the next payroll.

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New retirees should declare tax elections as part of the online retirement application. Persons who fail to complete a withholding form will automatically have federal taxes withheld with a “married with three allowances” status. This rule is mandated by the Internal Revenue Service. State withholding will default to zero.

General Information on Taxability of ASRS Benefits

ASRS pension benefits are considered taxable income by the Internal Revenue Service. Generally, pension benefit payments are considered taxable income for contributions to the ASRS after July 1, 1986, excluding any purchased service prior to retirement made with after-tax money. The amount of money in a member's account that is not subject to taxation during retirement is derived from contributions received prior to July 1, 1986.

Tax laws can be complicated, and the ASRS strongly recommends that members seek professional advice on tax-related questions and concerns.

About Federal Income Taxes

When a member retires and starts receiving a monthly retirement pension, this pension is considered revenue and becomes reportable as “taxable” income. Members fall under one of three groups:

  • RETIRED BEFORE JULY 1, 1986 were given up to three years to recover their taxed contributions before reporting their retirement pension as taxable income. All retired members in this group should be reporting their entire pension benefit as taxable income.
  • RETIRED ON OR AFTER JULY 1, 1986 but made contributions before July 1, 1986 are required to report a portion of their pension benefit as taxable income.
  • BEGAN CONTRIBUTING TO THE ASRS ON OR AFTER JULY 1, 1986 are required to report their entire pension benefit as taxable income upon retirement.

IRS Form 1099-R, an end-of-year statement similar to a W-4 statement for workers, reports the following information:

  • The total amount of the member’s pension for the previous year.
  • The amount of taxable income.

About State Income Taxes

In 1989, the Arizona Legislature passed a bill which mandates the taxation of retirees’ pensions for the year of 1989 and thereafter. Retirees living in Arizona are required to pay Arizona state income taxes on any taxable distribution from the ASRS over $2,500 per year. Retirees living in other states are not required to pay Arizona state tax and the ASRS cannot withhold for any other state’s income tax liability.

Withholdings & Statements

Update Your Tax Withholdings

Retirees may make changes to their tax withholdings online in their secure account. To do this, log in using the button below, and from your secure homepage, select the link titled Taxes from the left-hand menu. You can view your current tax witholdings and/or modify them for the next pension payment going forward.

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IRS Tax Form 1099-R

Watch this video for help understanding your 1099 Statement.

 
Additional Information

  Special Tax Notice Regarding Non Survivor Benefit Plan Payments

  Special Tax Notice Regarding Survivor Benefit Plan Payments

Internal Revenue Service website: IRS.gov

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