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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15722
Experience:  15years with H & R Block. Divisional leader, Instructor
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Can the IRS tax my Public Safety industrial disability ret

Customer Question

Can the IRS tax my Public Safety industrial disability retirement
Submitted: 2 years ago.
Category: Tax
Expert:  Robin D. replied 2 years ago.
Hello and thanks for trusting me to help you today. I am a tax adviser with over 20 years of experience.
You should receive a 1099R for distributions made to you. On this form you may see an amount in Box 5. That amount is not taxable or, it is an Industrial Death benefit or an Industrial Disability Retirement benefit with an "excess income" taxable percentage.
The amount in Box 2a represents the taxable amount of the gross distribution (Box 1) which has been further reduced by the amount in Box 5, if any.
A short answer to your question would be yes but that is not a complete answer. Your specific payments and contributions determine if any is taxable.
Any contributions that were deducted during employment that were paid before taxes are "pre-tax" contributions. Since no taxes were paid on them at that time, your benefit is fully taxable.
You retired under Tier Two and did not pay any contributions while working.
You have already used up the total previously taxed contributions in prior tax years. Your allowance is now "fully taxable."
Every situation is specific.
For tax reporting purposes, IRS requires CALPERs to report Disability Retirements the same as Service Retirements.
Only Industrial Death benefits and Industrial Disability Retirement benefits with no "excess income" taxable percentage qualify for the Internal Revenue Code tax benefit exclusion (IRC section 104(a)(1)).
Expert:  Robin D. replied 2 years ago.
Please advise if you need clarification.