Do I have to report a TSP loan on my taxes?

Do I have to report a TSP loan on my taxes?

You separate from federal service and do not repay your loan in full . The IRS treats the amount of the declared taxable distribution as taxable income . In addition, if you are under age 59 ½, you may have to pay a 10% early withdrawal penalty tax .

Do you get a 1099 for a TSP loan?

IRS Form 1099-R — The TSP has mailed IRS Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., to participants who received a withdrawal up to December 29, 2020, and/or a taxable distribution of a loan up to December 31, 2020.

Where do I report TSP on tax return?

  1. Report the taxable portion of the TSP distribution on line 16b of Form 1040.
  2. Report the entire TSP distribution as a non-taxable pension and annuity distribution on line 16a of Form 1040 if any of the distribution is non-taxable.

Is TSP loan repayment pre tax?

TSP loan repayments are made with after-tax dollars. This differs from TSP contributions, which are pre-tax. The reason is simple: a TSP loan is not taxed (unless it becomes a taxable distribution), so the repayment is made with after-tax dollars.

What happens to my TSP loan if I leave federal service?

If you leave service with an outstanding TSP loan, you must repay the loan in full, including interest. If you have not made that payment within 90 days, a “taxable distribution” of the unpaid loan amount will be declared, potentially subjecting you to significant tax penalties.

How is TSP taxed?

The TSP is required to withhold 20% of your payment for federal income taxes. This means that in order to roll over your entire payment, you must use other funds to make up for the 20% withheld. If you do not roll over the entire amount of your payment, the portion not rolled over will be taxed.

How much will I be taxed if I withdraw my TSP?

20%
It is also important to note that the TSP is required to withhold 20% of any traditional TSP distributions to cover taxes so you may have to take out more than initially thought. This doesn’t mean that you’ll owe exactly 20% of your distribution in taxes. It could be more or less than that.

What part of my TSP is taxable?

Where is TSP on W-2?

Box 12
The total amount of traditional TSP contributions is reported in Box 12 of the employee’s 2020 Form W2. The total amount of excess traditional TSP contributions during the year 2020 is reported on the employee’s 2020 federal individual tax return as “taxable wages”.

Does a TSP loan show on credit report?

The TSP loan does not appear on credit reports as a loan, and because it is your money you do not have to report it as a loan on your mortgage application (you can’t borrow money from yourself, after all). If you are required to provide the source of funds, these funds are from your retirement savings.

What happens if you don’t repay TSP loan?

If you do not repay your loan in full, a taxable distribution of the outstanding balance of your loan will be declared. If you’ve left federal service, you will not be able to withdraw your TSP account unless your loan is closed by either payment in full or taxable distribution.

What happens if I don’t pay off my TSP loan?

If you aren’t able to pay your loan down early, don’t worry: you can still retire with an outstanding TSP loan. If you can’t pay the remaining balance by then, you will owe income taxes — both federal and state — at your regular rate on the outstanding balance and interest.