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Military pension disability exclusion question. I have a client receiving a military pension for years of service. Three months military retirement, he was diagnosed as 70% disabled due to military activity. Based on Pub 525, I believe the 70% should be excluded from his taxable military pension income. However, his 1099R shows an amount, taxable amount (both the same) and a code 7 (normal distribution). On the "General Rule" screen of the 1099R section within PTO, there are fields called "Exclusion percentage" and "Exclusion amount." When I enter 70, .70 or dollar amount, PTO is not calculating/excluding any amount. What am I doing wrong? How do I proceed?
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https://myarmybenefits.us.army.mil/Benefit-Library/Federal-Benefits/Federal-Taxes-on-Veterans-Disabi...
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VA disability payments don't normally show up on a 1099R. Are you sure you aren't dealing with two separate payments?
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If the veteran is receiving concurrent combat related disability and has been qualified as such by the VA and give up a portion of their normal VA disability pay, they are entitled to additional exclusion of income from their 1099-R amount of taxable income. Based on IRS code sectiu9nb 1.122-1 (d) examples 4, 5 and 6, based on their original retired active duty pay and less retired pay waived, the veteran can get 70% of their normal military retirement pay excluded from income. I've got VA clients that have claimed it for years. Google it, you'll never get a correct answer here, too complex of an issue.
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Hello there! I am trying to take this exclusion for one of my clients as well.
He is less than full retirement age and was retired honorably on military medical discharge. Then three years later, VA determines he was 100% disabled since Dec 2018 when he was discharged. In 2021 once rated 100%, they gave him the choice to take a VA paid disability pension or a DFAS pension.
The regular pension amount was higher so he chose that. Now I am trying to exclude the amount of what the VA disability pension would have been if he had accepted that.
How or where in Proseries Basic can I exclude the disability part of his pension?
Did anyone get an answer for that?
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You have to pay close attention! The only time you get to reduce the taxable portion of a Veterans Retirement income shown on the 1099-R is if the Veteran is specifically declared a "Concurrent Combat Related Disability" (CCRD) Retiree, This is a special category of disability approved by the VA. Any other tax free adjustments are only allowed if the VA made an after the fact adjustment to the disability and it should have affected the taxable amount on the 1099-R. Many veterans are 100% disabled and retired, but are not :CCRD" and can not adjust the taxable retirement on their 1099-R.
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Thank you very much Donnie Jo!