TAX Laws on Military Disability Severance Pay

What is the name of your state?

I am from California being Medically seperated from the US Navy. I was rated at 10% and will be recieving Disability Severance Pay. I know about the St. Clair Decision but want to make sure if I do or do not have to pay taxes on this lump sum money. Any advice or info would be greatly appreciated. Thanks

Tony

Giv't disability pay is not taxable, whether it's paid by the military or by the state's worker's comp funds. The military should not report the disability income to you on a tax form.

However, if you retired, you will receive your pension or your disability pay, whichever is higher. If your pension is higher, the difference between the pension amount and the disability amount is pension income and is taxable. EX: $900/mo pension with $500/mo disability award will result in $400/month taxable income.

I was retired after for years in the navy because of disability. I do not collects from the va. So my retirement pay which was awarded to fill in the financial hole that would follow me with my disability. I pay taxexon it. Any comments?