Have Tax Questions? Ask a Tax Expert for Answers ASAP
Hi and welcome to Just Answer!
First of all - you are correct that there are several exceptions to the age 59½ rule. Even if you receive a distribution before you are age 59½, you may not have to pay the 10% additional tax if you are in one of the following situations.
You have unreimbursed medical expenses that are more than 7.5% of your adjusted gross income.
The distributions are not more than the cost of your medical insurance.
You are disabled.
You are the beneficiary of a deceased IRA owner.
You are receiving distributions in the form of an annuity.
The distributions are not more than your qualified higher education expenses.
You use the distributions to buy, build, or rebuild a first home.
The distribution is due to an IRS levy of the qualified plan.
The distribution is a qualified reservist distribution.
Under IRS rules - you are considered disabled if you can furnish proof that you cannot do any substantial gainful activity because of your physical or mental condition. A physician must determine that your condition can be expected to result in death or to be of long, continued, and indefinite duration.
In most situations - if you receive social security disability benefits or disability retirement benefits - you would be considered disabled for tax purposes.
Otherwise - you need to ask your physical to issue a statement that (1) you cannot engage in any substantial gainful activity because of a physical or mental condition and (2) that the condition has lasted or can be expected to last continuously for at least a year or can lead to death.
If the Department of Veterans Affairs (VA) certifies that you are permanently and totally disabled, you can use VA Form 21-0172 instead of the physician’s statement.
Please let me know if you need any help or clarification.
i have several disabilities; legally blind, use a disabled placard, special transport and am on workman's comp. seems none of that fits your description since i still work to supplement my FERS pension. what about medical expenses?
The fact of having medical expenses is not consider a proof of disability.
But if your physical will issue a statement mentioned above - that might be accepted by the IRS. If you are legally blind - you also would be considered disabled.
the tax difference is $300. why did they even bother? i will only ever retire once like this. it was an early out offer. the counseling sessions were conference calls, not one on one. i did the best i could, got the Pub 17, even bought turbo tax for sch L, etc. hated it. did the return with a calculator...and processing redid it and sent me an adjustment notice. i did a nice conservative return and they(GMF Perfection unit) revamped it and gave me more back. now the audit notice... i'm an imf return. audit notice came from SBSE. I contacted Accts Mgmt and put the pension amount on 16 like their lady told me...now another stab at it from some young gung-ho type. The USPS is a classic bad payer for 3 decades and my audit guy write me he doesn't know what a bad payer is...
I understand your frustration.
However I may not know the actual reason why the IRS decided to audit you.
Unfortunately – I may not solve your problems, I may only help you by providing answers on your questions and some supporting documents you might want to use.
I might suggest having someone to represent you with the IRS. In some situations that helps.
Please feel free to ask for clarification, I might not be immediately available but surely will respond.