Pensions, military retirement and taxes

The Oregon tax code states that you may be able to subtract some or all of your taxable federal pension included in your federal income. This includes benefits paid to the retiree or the beneficiary. It does not include disability payments if you have not attained the minimum retirement age. The subtraction amount is based on the number of months of federal service before and after Oct. 1, 1991:

• If all of your months of federal service occurred before Oct. 1, 1991, subtract 100 percent of the taxable federal pension income you reported on your federal return.

• If you have no months of service before Oct. 1, 1991, you cannot subtract any federal pension.

• If your service was both before and after Oct. 1, 1991, you will subtract a percentage of the taxable federal pension income you reported on your federal return. To determine your percentage, divide your months of service before Oct. 1, 1991, by your total months of service. Once you determine the percentage, it will remain the same from year to year.

For example Commander Smith worked for the U.S. Navy from May 1, 1976, until July 31, 2010. He worked a total of 411 months — 185 months before Oct. 1, 1991. In 2010, he received federal pension, military retirement, income of $65,000. He can subtract 45 percent (185 ÷ 411) or $29,250 (.45 x $65,000) of his federal pension. Commander Smith will continue to subtract 45 percent of his federal pension from Oregon income in future years.

If your federal service start date was the 1st through the 15th of a month, include the entire month when counting federal service. If your federal service start date was the 16th through the end of a month, do not include the first partial month of service. Start counting the months of federal service with the first full month.

If your federal service retirement date was the 1st through the 15th of a month, do not count this final partial month when counting the total months of federal service.

If your retirement date was the 16th through the end of the month, include the entire month when counting the total months of federal service.

Remember the above are guidelines. Call me for additional information or to set up an appointment, 541-962-8802. I am located at the Center for Human Development (CHD), 2301 Cove Ave, La Grande.

Byron Whipple is the Union County veterans service officer.