Expert: Jim Pastore - 2/1/2004

Question
My husband is a 20 yr. Ohio veteran police officer.  He was injured in the line of duty & was forced to take an early retirement on disability.  He is actively employed at a desk job & living in another state, but receives his disability pension.  My question is does he pay taxes on his pension? How does it work with the IRS. I am confused & now the IRS is saying he owes (lots). I don't understand why he should be penalized for his injury & not being able to serve & do what he loved to do... any help would be appreciated.  thank you

Answer
Hi Jeanne,

       First it depends on which pension system your husband was in. Was it PERS LE, or PFPDF? The PERS LE is I believe 40% tax free. I'm not exactally sure on the percentage though. You would know when you get the 1099-R at the end of the year. Line 1 will show the gross distrubtion and then line 2a will show the taxable amount. Line one will be approx 40% higher then line 2a. The difference is not taxable. I hope this helped somewhat.

Jim