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firefighter disability pension tax free
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albellefeuille
Level 1
02-16-2022
10:12 AM
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Paid Full time Fighter Fighter retired prior to scheduled retirement date due to in service disability. Would like to know if this pension is not taxable.
Thank You
[email address removed]
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2 Comments 2
sjrcpa
Level 15
02-16-2022
10:39 AM
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Did he get a 1099R?
If yes how is it marked as to taxability?
Are you asking about taxability in a particular state?
The more I know, the more I don't know.
Krazy
Level 2
02-16-2022
05:50 PM
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I handle a bunch of these returns. The 1099 can be issued incorrectly. It depends on the rules of the state where you live. Most of my firefighters are in Colorado. The disability is from FPPA. This is completely tax free, if they were hurt on the job. However, since there is an offset of their monthly disability for the money in their 401(k), that makes the 401(k) tax free as well. FPPA has a PLR from the IRS stating as such. So, if one of my clients gets a 1099-R that shows the amount dispersed as taxable, then I write a letter of explanation showing that the taxpayer was deemed disable on the job. I include a copy of the PLR. I then correct the taxable amount to zero on the return. I attach the proof as a pdf when I e-file. It takes some time, but they always get their money returned if it was withheld. This does not apply to the 457(b) plan as there was no offset. In Colorado, it doesn't apply to off-duty injuries that lead to a disability.
