Q. If I was to take a normal FERS retirement on Dec. 31, 2017, would the money I receive for unused annual leave be income for 2017 or 2018? Also if I have an outstanding TSP loan, would the unpaid balance be reported as taxable income for 2017 or 2018?
A. Since both of these payments would be constructively received in 2018, they will count as taxable income in 2018. That doesn’t mean that they will be reported that way on the 1099s that will be produced and dealing with any difference in what happens and what is reported to have happened is up to your tax preparer.