Disability Pensions

If you retired on disability, you must generally 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 Form 1040, 1040-SR, or 1040-NR, line 1h, until you reach minimum retirement age. Minimum retirement age is generally the age at which you can first receive a pension or annuity if you aren’t disabled.

You may be entitled to a tax credit if you were per-

TIP manently and totally disabled when you retired.

For information on this credit, see the Instructions for Schedule R (Form 1040).

Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. When you receive pension or annuity payments, you are able to recover your cost or investment. Your cost is generally your net investment in the plan as of your annuity starting date. It doesn’t include pre-tax contributions. For more information, see Cost (Investment in the Contract) and Taxation of Periodic Payments , later.

Report the payments on Form 1040, 1040-SR, or 1040-NR, lines 5a and 5b.

Disability payments for injuries incurred as a di-

TIP rect result of a terrorist attack directed against the

United States (or its allies) aren’t included in in- come. For more information about payments to survivors of terrorist attacks, see Pub. 3920, Tax Relief for Victims of Terrorist Attacks, and Pub. 907.

Military and government disability pensions. Certain military and government disability pensions aren’t taxable.

Service-connected disability. You may be able to exclude from income amounts you receive as a pension, an 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.