pension tax calculator
Are military pensions tax-free?
Ok, I’m going to ask my dad when he gets home, but I’ll go here and see what you guys say.
My dad retired from the military a few years ago, got a civilian job, and as far as I know, he is collecting his pension. By doing this, he has raised his salary by 50%.
But is the $$$ he is receiving from the government for retired tax free? I’m asking for College and financial aid forms depend on it. I was playing around with FA calculators and if I incorporate his pension with his regular pay, our EFC number is high, but not unbearable.
Then I put the $ he is receiving from the government under “Untaxed Benefits/Income” and the EFC skyrocketed to a number I knew we would never be able to afford.
So, I know 99% of people here would want it to be tax free, but is it?
Retired US Navy here. Retirees pay taxes on their military pension. I’ve been paying taxes on mine for over 23 years now. If a retiree is ALSO receiving disabilty pay, the part of his retirement that is considered the disability pay is non-taxable. Say a retiree is receving $3,000 a month (for argument sake) and is receiving a 25% disability, he’d pay taxes on $2,250 a month, and the $750 would be tax free.
I understand there was a bill being worked on to make a retiree’s disabilty pay SEPARATE from his/her military pension. He/she would receive his/her full retirement PLUS what ever percentage of disabilty pay. If he/she was drawing $3,000 a month retirement, then he/she would receive an ADDITIONAL $750 tax free (giving him/her a $3,750 income). I don’t know where that is now, if it was ever passed.
Good luck!
(USN, retired, 1965 – 1985)
Recovery: Making Work Pay (ASL, Captions & Voice Over) – June 09
