How do I know if my disability pension should show up as pension or wages?
If you receive a disability pension (Form 1099-R, box 7, code 3), be sure to answer the question about minimum retirement age. Retirement age is the earliest age, usually 55, that you can receive a pension or annuity from your employer if you had not been disabled. Taxable payments are reported as wages, until you reach the minimum retirement age and are counted as earned income instead of retirement. We will walk though this together in TurboTax.