You can qualify for a partial retirement disability income exclusion of up to $5,200 if you are:
● under the age of 65
● retired as permanent and totally disabled, 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 federal Form 1099-R. If you qualify for this exclusion, you should complete Montana Form DS-1 in order to determine the amount of your exclusion. You should also include a copy of the completed Form DS-1 with your income tax return.