ARTICLE: Nation can't afford military's generous retirement system

[oldsoldier1976]

Originally Posted by Poncho_NM

Possibly by your own choice.

Pension is taxable. Disability pay is not.

So would you rather have $700 and pay tax on it, or $700 tax free?

I think at some point, like SSA, his disability will be switched over to his retirement pension pay.

[Submariner]

Originally Posted by Poncho_NM

Possibly by your own choice.

Pension is taxable. Disability pay is not.

So would you rather have $700 and pay tax on it, or $700 tax free?

Are there states that would tax a $700/month income?

My pension is more, and yet it falls below the minimum taxable levels in this state.

[oldsoldier1976]

Originally Posted by Submariner

Are there states that would tax a $700/month income?

My pension is more, and yet it falls below the minimum taxable levels in this state.

I am not sure. Check here. Taxes by State they have a comprehensive explanation of the taxes each state has. I will say CA will tax it for one.

California
Personal Income Taxes

Tax Rate Range: Low – 1.0%; High - 12.3%. For 2010 the state has enacted a 0.25 percentage point increase in each of the state’s income tax brackets. A tax credit for dependents was reduced from $309 to $98.
Income Brackets: ** Lowest – $7,455; Highest – $48,942
Number of Brackets: 6
Personal Exemptions: Single – $102; Married – $204
Tax Credits: Single - $99; Married – $198; Dependents – $315; 65 years of age or older – $99
Standard Deduction: Single – $3,769; Married filing jointly – $7,538
Medical/Dental Deduction: Same as Federal taxes
Federal Income Tax Deduction: None
Retirement Income Taxes: Social Security and Railroad Retirement benefits are exempt. There is a 2.5% tax on early distributions and qualified pensions. All private, local, state and federal pensions are fully taxed.
Retired Military Pay: Follows federal tax rules.
Military Disability Retired Pay: Retirees who entered the military before Sept. 24, 1975, and members receiving disability retirements based on combat injuries or who could receive disability payments from the VA are covered by laws giving disability broad exemption from federal income tax. Most military retired pay based on service-related disabilities also is free from federal income tax, but there is no guarantee of total protection.
VA Disability Dependency and Indemnity Compensation: VA benefits are not taxable because they generally are for disabilities and are not subject to federal or state taxes.
Military SBP/SSBP/RCSBP/RSFPP: Generally subject to state taxes for those states with income tax. Check with state department of revenue office.

[Crew Chief]

Ohio no longer taxes military pensions, thankfully.

[Boompa]

Because my VA compensation is more than my disability retirement, I collect the VA, which is,as you say not taxable. That was a system which arose over time. Initially I was collecting partial when my VA was less. The fact that the Army was only paying me $700 a month for a disability was shameful enough. Now at 70 I have to send them $50 a month for my wife's SBP and get nothing is pretty sad.

[oldsoldier1976]

Originally Posted by Boompa

Because my VA compensation is more than my disability retirement, I collect the VA, which is,as you say not taxable. That was a system which arose over time. Initially I was collecting partial when my VA was less. The fact that the Army was only paying me $700 a month for a disability was shameful enough. Now at 70 I have to send them $50 a month for my wife's SBP and get nothing is pretty sad.

That certainly is sad. If I get my way when I retire I plan on becoming a VA rep so that I can assist those in need. For me as I see my second life (retirement) I and my wife are set. Just a few adjustments and a nifty move to a warmer climate and voila golf anytime I want. Some of the larger cities have VA council reps. I hope to land me a gig in volunteering for one of those. It all depends on where I end up. Also I won't be able to do it forever. Probably 10 years or so. I think it will be fun and rewarding. To be able to find ways and loop holes to help people in your position and all.