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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29581
Experience:  Taxes, Immigration, Labor Relations
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Lev I'm a medically retired (Service-Connected Disability)

Customer Question

Hi Lev
I'm a medically retired (Service-Connected Disability) peace officer (California in 1994). No tax filing problems until recently. Rec'd mail from IRS stating 2013 income from disability should have been reported as income. Turned 48 that year. Used Turbotax for 1st time that year...probably the issue. :)
What should I send/demonstrate to the IRS to get them to discount this as income? What documentation, etc?
Submitted: 2 years ago.
Category: Tax
Expert:  ShawnA replied 2 years ago.
Hello. My specialty is focusing on YOUR Financial needs. Financial Planner/Business Owner for 20 years. Retired CPA
I assume Lev will be on at some time. Please let us know if you would accept an answer from another expert or if you prefer to wait for Lev.
Have a great day.
Customer: replied 2 years ago.
Ill wait
Expert:  Lev replied 2 years ago.
Hi and welcome to our site!
The IRS based their decision whether your disability benefits are taxable or not - on how these benefits are reported by the payer.
The payer most likely reported these payments as taxable - and that is why the IRS assessed additional tax liability.
Most likely - you received form 1099R reporting your disability benefits for 2013. If you are not able to locate that form - you may either contact a payer asking for duplicate or request your tax account transcript from teh IRS and verify that reporting.
Another issue - if the payer correctly reported these disability benefits as taxable.
If you retired on disability, you must 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 line 7 of Form 1040 or Form 1040A until you reach minimum retirement age. Minimum retirement age generally is the age at which you can first receive a pension or annuity if you are not disabled.
Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. Report the payments on lines 16a and 16b of Form 1040 or on lines 12a and 12b of Form 1040A.
Certain military and government disability pensions are not taxable. You may be able to exclude from income amounts you receive as a pension, annuity, or similar allowance for personal injury or sickness resulting from active service in one of the following government services.
•The armed forces of any country.
•The National Oceanic and Atmospheric Administration.
•The Public Health Service.
•The Foreign Service.
There are certain conditions for exclusion.
So - please verify if your disability benefits are based on personal injury or sickness resulting from active government services listed above.
Let me know if you need any clarification this matter.
I am here to help you with all tax related issues.