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Is My Pension Check Taxable?

Q: Is My Pension Check Taxable?

 A: Most pensions are fully taxable. Some are partially taxable if you had a cost basis in the pension. In a few unique situations they may be tax-free. This is especially the case when they come from the Veterans Administration or when they involve disability payments for public safety officers and firemen.

You should receive a Form 1099-R from the administrator of the pension plan. It usually tells you how much of the payment is taxable. See the instructions for IRS Form 1040 or 1040A, and also see IRS Pub 575, “Pensions and Annuities,” for more information. You can get access at www.irs.gov by clicking on the Forms & Publications link on the left side of the page.

 These questions are actual inquiries submitted by taxpayers to our AARP Tax-Aide Program. The AARP Tax-Aide Program is a volunteer-run, free tax-preparation and assistance program offered to low- and middle-income taxpayers with special attention to people age 60 and older. Our volunteers are trained and IRS-certified to understand individual federal-tax issues. Our volunteers provide tax assistance as a public service and cannot guarantee the accuracy of the information provided.

 

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