If you are retired on disability and have not yet reached the "Minimum Retirement Age" for your specific OPM plan, the IRS treats this as Wages, not a Pension. Even though it comes on a 1099-R, the income is reported on the same line as W-2 wages (Line 1 of your 1040). Here is how to enter this.
- Enter the 1099-R exactly as it looks: * Leave Box 2a blank (do not type "Unknown" or "0").
- Check the box in Box 2b that says "Taxable amount not determined."
- Verify Box 7: It should have a Code 3 (Disability).
- The Critical Question: After entering the form, TurboTax will ask a series of questions. Look for one that asks: "Did you reach the minimum retirement age before January 1, 2026?"
- Since you are under retirement age, answer No.
- TurboTax will then ask if you want to report this as Wages. Select Yes.
This should end the interview and put a halt to the simplified method questions.
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