November 24, 2009

Georgia Educator Recovery Adjustment - More Information

In May, I wrote a post called "Did You Contribute to TRS Between 1987 and 1990?" In that post, I discussed that a client of mine had passed on some information that she had received from TRS regarding a recovery adjustment for contributions to TRS during July 1, 1987 through January 1, 1990.

Since that time, there has been no real news, but recently, TRS added some information to their website regarding the subject.

Essentially, several people believed that the amount for the recovery adjustment was in fact a recovery credit (meaning that they were owed the entire figure). Unfortunately, this is not the case as I stated in my previous post, but I can definitely understand where someone would believe this to be true.

Georgia's income tax rate is 6%, so the largest benefit you could possibly receive would be about 6% of the amount on the letter (i.e. $2,000 in contributions in the letter would net about $120 in recovery). There are several factors of course, so your accountant and/or tax preparer is the best person to help you find out how much (if any) benefit you may receive.

The information below is directly from the TRS website - click here to see the entire article:

"To be clear, the amount shown in the letter you received is not the amount you are owed by the Georgia Department of Revenue, but is the amount of money from which you can recover the taxes you paid on it. This money has nothing to do with incorrect contribution amounts. The contributions you made to TRS during this time were and are correct."

"If you fall into this adjustment period and are unsure as to whether or not you filed for this adjustment, we recommend that you go back and check your tax returns for the applicable year to avoid claiming the recovery more than once. If you already received your adjustment, then you are all set. If you did not claim the adjustment, please contact the Georgia Department of Revenue directly at or 877-602-8477 to find out if you are still eligible."


Becky said...

Thanks for your earlier posts about the one time recovery adjustment for teacher retirement. Can you tell us where to file this on our tax forms?

Robert (Robby) E. Schultz III, CFP®, ChFC®, CPWA® said...


Thanks for your question. I would really rather you discuss this with your tax professional.

My own personal opinion is that you should reduce the GEORGIA taxable amount of the TRS contribution by the recovery. For example, if the gross distribution was $40,000 and the taxable amount was $40,000, the taxable amount for GEORGIA should be lowered by your recovery amount (as an example I will say $1,000).

Thus, the gross amount could be $40,000, the federal taxable amount could be $40,000, and the Georgia taxable amount could be $39,000.

This is something that your tax professional should be able to help you with quite easily.

Good luck and thanks for reading the blog!