Disability Exclusion

Partial Retirement Disability Income Exemption for Taxpayers Under Age 65
You can qualify for a partial retirement disability income exclusion of up to $5,200 if you are:

under the age of 65 and you are retired on disability, and
not treating your disability income as a pension and annuity.

You are permanently and totally disabled if you are unable to engage in any substantial gainful activity, if you have been medically determined to be physically or mentally impaired and if your condition is expected to last at least 12 months.

Your disability income is generally reported with a distribution code 3 on your Form 1099R. If you qualify for this exclusion, you should complete Montana Form DS-1 in order to determine the amount of your exclusion.

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