In the case of disability pay, whether it is taxed or not usually depends on who paid for the disability insurance coverage. Her husband had been receiving the payments tax-free since 1993 after he was disabled while working for the L.A. County Sheriff’s Department. Yet when retirement payments commence, the retirement payments are normally taxed. The disability retirement pay commenced when her husband became disabled. After all, she and her husband got the payments tax-free all those years since 1993 while they were married.

Source: Forbes July 05, 2017 12:45 UTC