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I have a client who has a letter dated January 14, 2020, which is a summary of his VA benefits. He is telling me his 1099-R (which has an amount listed in Box 2), is considered nontaxable. I have been trying to find a specific answer but I see answers that say both yes and no. I have looked over Publication 529 - Military and Government Disability Pensions and based on what I can tell, it doesn't sound like his 1099-R would be nontaxable. Am I correct or am I completely incorrect?
Thank you in advance.
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VA disability benefits aren't taxable but they don't get reported on a 1099R. So I'm guessing what is on the 1099R aren't disability benefits but are regular pension benefits.
Slava Ukraini!
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That is what I am explaining to him, that if his pension is marked as taxable income and is code 7, those are not considered a VA benefit.
Thank you for your answer.
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You betcha!
Slava Ukraini!