The Facts are: Tp became disabled in 2015(age 52). TP worked for GE. Started suit with SS. Won suit in 2018 with LARGE lump sum going back to 2015. During 2018 TP with drew from investment co 39K. Investment co sends 1099R with gross and taxable amount 39k with a code 1 in box 7. Using form 5329 I can remove the penalty. My question is can this be considered for the Virginia disability subtraction? On the 1099R form I see a notation "GE RETIREMENT SAVINGS PLAN". I think this came out of an old retirement plan and not eligible. Do any you Virginia preparers know the answer?
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I do not believe that particular payment is eligible. It must be "reported as wages.... or in lieu of wages..due to total and permanent disability" on the federal return. See IRC 22(c)(2)(b)(iiii.) If he received such a payment from GE reportable as W-2 on Line 7 of 1040, maybe. Recommend downloading Form 760 instructions and refer to pages 16-22 for subtractions and deductions. There are a ton of them. If he has LTC premiums, for instance?
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