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I retired prematurly from the Atlanta Police due to medical disability(not OJT injury). Re

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cently, I was told of...
I retired prematurly from the Atlanta Police due to medical disability(not OJT injury). Re cently, I was told of a tax code "102b2" that may make my pension tax exempt. My pension was calculated on my 20 yrs service, which, to this point, I thought made it taxable. Please tell me about 102b2, said to deal with Peace Officer, Police disability retirement issues. Thank You.
Submitted: 7 years ago.Category: Tax
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12/13/2010
Tax Professional: Brenda Guy, Certified Public Accountant (CPA) replied 7 years ago
Brenda Guy
Brenda Guy, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 151
Experience: 20 years of working with income and estate tax issues for families and businesses.
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The code section is actually 104(a)(4). And that is correct your pension is exempt due to your disability.

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Customer reply replied 7 years ago

Dear Ms. Guy;

Thank you for a favorable response. This is the first time I've put out a credit card number on the web for anything and am a skeptical novice to the internet.

 

Please tell me where I can view, or obtain a copy of that code section. I have used a CPA for years because of a rental property, and I'm wondering why he didn't pick up on this because I knew a fund I paid into with the State was catagorically exempt, but I was told intially, the City pension was not exempt because it was calculated on my years of service like a regular pension. Thank You, XXXXX

Tax Professional: Brenda Guy, Certified Public Accountant (CPA) replied 7 years ago

The following link is to a website where you can view the IRS code for free.

 

http://www.taxalmanac.org/index.php/Internal_Revenue_Code:Sec._104.

Compensation_for_injuries_or_sickness

 

As far as your CPA, perhaps he should have found the exclusion, however, this is a complicated issue and not as clear as we would like it to be.

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Customer reply replied 7 years ago

Dear Ms. Guy;

 

Thanks again, sorry I have had to take time for other matters this afternoon. What I need to know now is how the authority (IRS),etc. applies this to Police, Fire or other related personnel. It doesn't mention those catagories specifically. What can be said with certainty, as to 104(a)(4) applies to me, as disability pensioned from a Police Department Enforcement Officer capacity?

 

Note:I like the progress with Brenda Guy, I would like to stick with her as this is a complicated issue. Thank you.

Tax Professional: Brenda Guy, Certified Public Accountant (CPA) replied 7 years ago

Unfortunately, I cannot give you an answer that you can put in a file and use as support. Just Answer does not work that way. Here is an excerpt from the code section documentation that touches on the topic. The entire document is over 200 pages. This is beyond the scope of Just Answer. At this point, if you want more certainty you should take this info to a CPA and engage them to do the research. I have come across this before and would take this position on a tax return. That just isn't going to be enough for what you are looking for. I hope this gets you pointed in the right direction.

 

TREATMENT OF CERTAIN DISABILITY BENEFITS RECEIVED BY FORMER POLICE OFFICERS OR FIREFIGHTERS.

Sec. 1529 of Pub. L. 105-34, as amended by Pub. L. 105-206, provided the following rule:

(a) General Rule.--Amounts to which this section applies which are received by an individual (or the survivors of the individual) as a result of hypertension or heart disease of the individual shall be excludable from gross income under section 104(a)(1) of the Internal Revenue Code of 1986.

(b) Amounts To Which Section Applies.--This section shall apply to any amount--

(1) which is payable--

(A) to an individual (or to the survivors of an individual) who was a full-time employee of any police department or fire department which is organized and operated by a State, by any political subdivision thereof, or by any agency or instrumentality of a State or political subdivision thereof, and

(B) under

(i) a State law (as amended on May 19, 1992) which irrebuttably presumed that heart disease and hypertension are work-related illnesses but only for employees hired before July 1, 1992, or

(ii) any other statute, ordinance, labor agreement, or similar provision as a disability pension payment or in the nature of a disability pension payment attributable to employment as a police officer or fireman, but only if the individual is referred to in the State law described in clause (i); and

(2) which was received in calendar year 1989, 1990, or 1991.

(c) Waiver of Statute of Limitations.--If, on the date of the enactment of this Act (or at any time within the 1-year period beginning on such date of enactment), credit or refund of any overpayment of tax resulting from the provisions of this section is barred by any law or rule of law (including res judicata), then credit or refund of such overpayment shall, nevertheless, be allowed or made if claim therefore is filed before the date 1 year after such date of enactment.

 

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Brenda Guy, Certified Public Accountant (CPA)
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Experience: 20 years of working with income and estate tax issues for families and businesses.
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