Md pension exclusion

[happyfeet001]

If you own a small business and file a schedule C where you split cost with your husband who actually works the business and i have a 1099-R for disability, can i claim the md pension exclusion if i am under 65. Does the schedule c disqualify me from getting the exclusion on the disability pension?

[Vanessa A]

Possibly.  The Schedule C does not automatically disqualify you, however, to claim the disability exclusion, you need to be disabled.  To meet the rules for the exclusion you must meet the Maryland Definition of totally disabled if you are under 65.  This means if you have income on Schedule C that shows you are able to participate in Substantial Gainful Activity, you would not be considered totally disabled.  So if you are showing on YOUR Schedule C (whether or not you are out in the field working) that you are able to have gainful employment, you may raise a red flag trying to claim the disability pension exclusion.