Disability Pensions:IMPORTANT TAX INFO-you may have money due from the IRS

[barkley]

i want to share something i discovered in the federal tax code, shared with my cpa who was skeptical but when she researched it found i was correct. she's now ammending last years return for us to garner a significant refund, and it's made a bigger impact on this years-

if you or your spouse receive a disability based pension, and you are under the minimum age your former employer normaly permits non disability based retirements-that pension is, for the purpose of the "earned income tax credit"-considered earned income.

example-minimum age an employer allows a vested person to retire is age 50, but you ended up at age 45 disabled such that you left their employment and qualified under them to receive a disability based pension. until you reach age 50, that pension is considered "earned income" for eitc calculation purposes.

now, you still have to meet all the other criteria for eitc-but if you do, it can mean a significant refund.

one word of caution/advice-apparantly if you are using tax software you realy need to hunt down the correct way to input this information otherwise it won't do the calculations correctly, but according to my cpa when she dug into the help section of her's it was there.