Is my military retirement pension taxable if I am a 100% disable veteran?

[frankie-miranda]

100% disable receiving disability from VA (non-taxable) and Army retired pension. Is my military retirement pension taxable if I am a 100% disable veteran?

[frankie-miranda]

I am in Alabama and does not tax my military pension.

[BarbL · Accepted solution]

Yes, the retirement portion is taxable, and is reported to you on your 1099-R.  The disability from the VA is not taxable and not reportable, as you know.

Some states offer exclusions for military retirement pension, or for disabled taxpayers.  Which state return do you file?

[frankie-miranda]

I am in Alabama and does not tax my military pension.

[BarbL]

You are one of the lucky ones!

[irmagarrett]

How about CA

[SweetieJean]

<a rel="nofollow" target="_blank" href="http://militaryintransition.com/military-pension-tax-rates-state/">http://militaryintransition.com/m...>

[1SG_retired]

Hello. If this is the case, what is the purpose of the 1040-X form and the ability in accordance with the combat-injured veterans tax fairness act of 2016 to request up to three years back pay?  Severance-pay is not on-going like monthly retirement (pension) which would account for the back-pay of up to three years.

Thanks in advance. 

[Critter]

That is because the pay was not reported correctly to start with ... those affected were able to make the correction.  Since then the income has been properly reported.   If you do not understand how your retirement/VA payments are or aren't taxed   then talk to DFAS or the VA  to be educated. 

The Combat-Injured Veterans Tax Fairness Act of 2016, enacted December 2016, allows certain veterans who received lump sum disability severance payments additional time to file a claim for credit or refund of an overpayment attributable to the disability severance payment. The law directed the Secretary of Defense to identify disability severance payments paid after January 17, 1991, that were included as taxable income on Form W-2, Wage and Tax Statement, but were later determined to be nontaxable and to provide notice of the amount of that payment. The Department of Defense is mailing letters to affected veterans (letters 6060-A and 6060-D) in July 2018.

[deanotp21]

What about this statement from page 18 of the IRS Pub 525

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.
• The armed forces of any country

Conditions for exclusion. Don’t include the disability payments in your income if any of the following conditions apply.

1...

4. You would be entitled to receive disability compensation from the VA if you filed an application for it. Your exclusion under this condition is equal to the amount you would be entitled to receive from the VA.  

I have been told DFAS is changing retired pay to exempt if show proof of 100% service connected permanent and total, page 18 of Pub 525 and memo requesting change.  This is confusing or are they seeing what they want to see.  

[DMarkM1]

For taxation purposes when you receive a form 1099-R from DFAS for retirement pension that is taxable income and reported by entering your 1099-R information.  This pay is for years of service. 

When you receive disability payments from the VA they are not reported to you on a tax form and you do not enter them anywhere on your tax return; this is a disability pension.  

If a veteran is receiving full retirement and full disability under concurrent receipt the retirement from DFAS is taxable and reported on the 1099-R while the VA disability is not reportable.

[John Schulte]

Everyone, 

This is my first year receiving a pension and just about died at the tax bill. In any case Minnesota also does not tax military pensions either.

[DMarkM1]

You are correct.  Here is a link with information on the military retirement tax friendly states.  

[CarolynCC137]

I am 100 percent disabled and draw a pension from the Air Force since 1995. Now I didn’t realize that my pension was taxable and have never filed taxes. So in this case what should I do?.  

I appreciate your help. 

Thank you,

Carolyn Barry 

[CarolynCC137]

I am 100 percent disabled and draw a pension from the Air Force since 1995. Now I didn’t realize that my pension was taxable and have never filed taxes. So in this case what should I do?.  I live in Delaware. 

I appreciate your help. 

Thank you,

Carolyn Barry