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TD27
Returning Member

disability nontaxable 1099R

I can't seem to figure when inputting income and one is PERS nontaxable 1099R, distribution 3 and I think Turbo Tax is putting it in a taxable category, I need to figure out if the software is including it as taxable income or not?  All prior years income was nontaxable.  

2 Replies
JohnW152
Expert Alumni

disability nontaxable 1099R

A distribution code of 3 on your Form 1099-R represents disability income.  This distributions isn't subject to an additional 10% tax as an early distribution, but it is still included in your taxable income.

According to Disability Pensions in the IRS's Publication 575,

If you retired on disability, you must generally include in income any disability pension you receive under a plan that is paid for by your employer. You must report your taxable disability payments as wages on Form 1040 or 1040-SR, line 1; or Form 1040- R, line 8, until you reach minimum retirement age. Minimum retirement age is generally the age at which you can first receive a pension or annuity if you aren't disabled.

It's possible that your state doesn't treat this as taxable income.

TD27
Returning Member

disability nontaxable 1099R

Thanks JohnW152

After going over my income data several times with TurboTax the thing that got me confused when asked or prompt on next page - something like you entered xxx taxable dollar/ A yes/no prompt.    In the end after going to the summary inputting all the numbers, I saw then Turbo Tax had it as nontaxable.   FYI - for PERS/LE it was disability settlement upon retirement as non taxable income for retirement. 

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