I am a 100% VA-rated veteran who also has a military retirement. I expected that Turbo Tax would have informed that according to Pub 525 Taxable and Nontaxable Income Rev 2020,
1. Certain military and government disability pensions aren't taxable.
2. Service-connected disability. You may be able to exclude from income amounts you receive as a pension, annuity, or similar allowance for personal injury or sickness resulting from active service in one of the following government services.
3. Don’t include the disability payments in your income if....You receive the disability payments for a
combat-related injury.
4. Pension based on years of service. If you receive a disability pension based on years of service, in most cases you must include it in your income. However, if the pension qualifies for the exclusion for a service-connected disability (discussed earlier), don't include in income the part of your pension that you would have received if the pension had been based on a percentage of disability. You must include the rest of your pension in your income.
4. If you retire from the U.S. Armed Forces based on years of service and are later given a retroactive service-
connected disability rating by the VA, your retirement pay for the retroactive period is excluded from income up to the amount of VA disability benefits you would have been entitled to receive.
Turbo Tax should have helped me to understand this situation. Instead, someone at work shared the information. This person is not a tax professional at all.
