Are we to deduct our VA disability compensation from military retirement when reporting the 1099-R since it does not reflect any of the VA compensation? Since I have the VA waiver, I feel it is incorrect to report wages that I did not actually receive as income. I am not eligible for CRDP and do not keep both pays since I did not complete 20 years of service after being given a medical retirement. Being a 90% disabled veteran, I only receive about $100 per month of military retirement and about $1900 (tax free) from the VA. My 1099-R accounts for taxable income I did not receive since it was waived from the VA before I was paid. Therefore, if I enter the amount instructed on my 1099-R, I will be paying taxes on income I never actually received because it only displays the number (~$2000 per month) before VA compensation deduction occurred. I feel it is wrong to report the forms $24,000 when I only received $1,200 in taxable retirement income ($100 X 12 months of military retirement pay). Based on these numbers, would I be correct to report the $1200 since that did not include VA compensation?
Also, as previously stated, I understand that VA compensation is paid separately and is not reported with military retirement on the 1099-R so it appears like we have to make this correction since the agencies do not talk to each other (solely based on the 1099-R) and it would be incorrect to report taxes on money that is not taxed.
