Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Military Income Workout

Medical Separation Pay

Case Study 2: Disability Pay (continued)

The scenario continues. Beginning in 2020, Sergeant Robert Martin received a service pension in the amount of $1,000 per month.

In August 2020, Robert received his VA determination letter, which showed he was entitled to a disability pension of 80% from the date of his discharge. So, for the last four months of 2020, Robert received $800 tax-free disability income from the VA, and $200 taxable pension from the government.

For how many months will Robert adjust his Form 1099-R wages in 2020?

12 months
8 months
4 months
No adjustment is necessary

Sergeant Martin.