Federal Employee Tax Services

Federal Employee Tax Services for DC, Maryland & Virginia Government Workers

Federal employees often have more complex tax situations than most. FERS vs. CSRS pension income, TSP withdrawal taxation, state tax treatment of federal pensions (dramatically different between Virginia, Maryland, and DC), GS pay and locality adjustments, and the intersection of federal employment with side income or consulting all require a CPA who understands the unique federal employee tax landscape. We serve GS employees, SES officials, and federal retirees throughout the National Capital Region.

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Free initial consultation · No obligation

Best for federal employees and retirees with pensions, TSP or a side business
Licensed CPA firm
Fees quoted upfront, in writing

Who helps federal employees with taxes in DC, Maryland and Virginia?

Your Virtual CPA is a licensed CPA firm that prepares returns and plans taxes for federal employees and retirees, including FERS and CSRS pensions, TSP withdrawals, side businesses and the different way DC, Maryland and Virginia tax federal pensions. Request a free consultation to talk through your situation.

What's Included

Federal employee personal tax preparation (W-2, 1099-R, FERS/CSRS pension income)

TSP traditional vs. Roth contribution strategy

TSP withdrawal and RMD planning for federal retirees

FERS vs. CSRS pension income tax analysis

State tax planning across VA, MD, and DC for federal pension income

Federal employee side income and consulting tax planning (1099, freelance)

Annual leave (lump sum) taxation planning at separation

Federal Employees Health Benefits (FEHB) and FSA tax optimization

FEGLI life insurance imputed income and tax treatment

Separation incentive (VSIP/VERA) tax planning

GS pay scale and locality adjustment tax planning

OPM retirement estimate review and income verification

Who This Is For

Active GS Federal Employees

You are employed at a federal agency (DOD, State, DHS, HHS, IRS, or any other) in the DC metro area and have a tax situation more complex than a simple W-2. Whether it is locality pay adjustments, TSP contribution optimization, or side income from consulting or a second job, we handle the full picture.

Federal Employees Approaching Retirement

The transition from active employment to federal retirement requires careful planning — you need to understand how FERS supplement taxation works, when to start TSP withdrawals, how to optimize your pension start date, and critically, which state you should retire in given very different state tax treatment of federal pensions.

Federal Retirees Receiving FERS or CSRS Pensions

Federal pension income is taxable at the federal level and varies dramatically by state. Virginia taxes FERS pensions (with a $12,000 subtraction for those 65+). Maryland exempts the first $15,000 of qualifying retirement income. DC exempts all government pension income from DC income tax. If you live near state borders, the right state of domicile can save $3,000–$10,000+ annually.

SES Officials and Federal Executives

Senior Executive Service officials and higher-grade federal employees often have more complex tax situations — significant TSP balances, performance bonuses, potential consulting income, or transition to private sector roles. We handle the full range of executive-level federal employee tax planning.

Our Process

Federal Benefits Review

We review your FERS/CSRS election, TSP account (traditional vs. Roth balance), FEHB plan, FEGLI coverage, and any leave balances to understand your full federal compensation package and its tax implications.

State Domicile Analysis

For federal employees near the DC/MD/VA borders, choosing the right state of domicile at retirement can mean $3,000–$10,000+ in annual state tax savings on pension income. We model each state's tax treatment of FERS/CSRS, TSP, and Social Security income to identify the most advantageous option.

TSP Strategy Planning

We analyze whether traditional (pre-tax) or Roth (after-tax) TSP contributions make more sense for your situation, model TSP withdrawal sequencing in retirement, and address RMD requirements when you turn 73. Your TSP balance is often your largest financial asset — it deserves careful tax planning.

Annual Tax Preparation and Year-Round Planning

We prepare your complete federal and state return, ensuring all federal employee-specific forms (1099-R for pension, SSA-1099, W-2) are handled correctly. Year-round tax planning addresses estimated payments for side income, withholding adjustments, and upcoming major events (retirement, TSP withdrawals, lump-sum leave payment).

Why Choose Your Virtual CPA

Deep understanding of FERS, CSRS, TSP, FEHB, and the specific tax forms federal employees receive

State tax optimization: we model VA vs. MD vs. DC residency for federal retirees where the choice can mean thousands per year

Experience with separation incentive taxation (VSIP/VERA) and lump-sum leave payment planning

TSP withdrawal strategy that minimizes lifetime tax burden — sequencing distributions optimally with Social Security and pension income

We understand GS locality pay, performance awards, and the specific W-2 boxes that apply to federal employees

Virtual services that work with federal employees' schedules — available evenings and weekends

Frequently Asked Questions

FERS pension income is fully taxable at the federal level (as ordinary income). At the state level, treatment varies dramatically: Virginia taxes FERS pension income (though taxpayers 65+ may subtract $12,000 of qualified retirement income). Maryland exempts the first $15,000 of qualifying retirement income for residents 65+. Washington DC exempts all government pension income from DC income tax entirely. Choosing the right state of domicile at retirement can mean thousands of dollars annually.

This depends on your current tax bracket vs. expected retirement tax bracket. Traditional TSP contributions reduce your taxable income now (worth more if you are in a high bracket today). Roth TSP contributions are after-tax but grow tax-free (better if you expect higher taxes in retirement). Most federal employees in the GS-12 to SES range benefit from a split approach — we model your specific situation.

At retirement, you can leave your TSP in place, withdraw as a lump sum (large tax hit), take installment payments, or roll over to an IRA. TSP has very low fees — often worth keeping in place and taking installment payments. Required Minimum Distributions (RMDs) begin at age 73 regardless. We plan the withdrawal sequence to minimize your lifetime tax burden.

Yes. The FERS Special Retirement Supplement (paid to FERS retirees under age 62 who retire with immediate pension eligibility) is taxable as ordinary income at the federal level, and at the state level per your state's rules. It is also subject to an earnings test if you have other earned income — we calculate the offset correctly.

Washington DC exempts all government pension income — this includes FERS, CSRS, and military retirement. Maryland exempts the first $15,000 of qualifying retirement income for those 65+ (with income limits). Virginia taxes pension income but allows a $12,000 subtraction for those 65+ (with phase-out above $50,000 income). For high-pension federal retirees, DC domicile can save $5,000–$15,000+ per year.

Yes, with important caveats. Federal ethics rules restrict outside employment — you need written approval from your agency for most paid outside activities, and some restrictions apply per your agency and GS grade. From a tax perspective, consulting income is self-employment income — subject to SE tax and requiring quarterly estimated tax payments. We handle the tax side; you handle the ethics compliance with your agency.

Related Services

Tax Preparation & Planning

Comprehensive personal tax preparation covering federal employee W-2s, pension 1099-Rs, and all income sources.

Bookkeeping & Accounting

If you have side consulting income, we track your self-employment expenses and keep clean records for estimated tax payments.

IRS Tax Resolution

If withholding was off or estimated payments were missed, we resolve any IRS balances and set up compliant payment plans.

Serving clients nationwide

Virtual CPA services for clients anywhere in the U.S. Local tax guides:

Washington DC Maryland Virginia

Ready to talk it through?

Schedule a short call to discuss your federal employee tax services needs.