I'm trying to sort it out. He gets a 35K pension as a military vet. He retired a Major a long time ago. Reading up on the topic it says disability payments aren't taxable.

I assume you figure out the taxable pension amount under the taxable pension worksheet which has something called the simplified method. Is that correct?

Additionally he seems to be getting some kind of disability but I'm not sure what. I'd like to know to figure out if any of it is tax free income. He has some ruling that states various degrees of disability but it says it establishes basic eligibility under the Dependent's Educational Assistance program. I looked that up and I don't see how that relates to my father. Perhaps this was some older program he applied for ? Or does it have any relevance to his present situation? He's 80 yrs old and hes been retired from the Army since I think the 70s-80s.
He then worked for the Vet Admin. He has developed prostate cancer and gout and there was some vague talk about Agent Orange, but he seems totally confused about what type of payments he's actually getting.

He is currently receiving 35K Military pension, 55K or so civil service pension and also got a lump sum from the military of 50K last year. He claimed it was for some ruling in which he and others were denied disability pay in the past, which was then ruled to be legitimate. So according to him, it's a lump sum payment for past years disability payments. He claims from now on that small amount, a monthly disability payment - will be added to his future pension checks.

How do I find out what's going? What portion is a disability pay? And what this lump sum is?

We've looked through the letters he kept from the gov and I don't see anything that indicates what it is besides a general military pension payment. I have the 1099s and a few letters.

Can I call the Vet Admin and find out?

Hello, I am sorry that no one has answered your question, I am sure you have found out the answers by now.

The lump sum payment is taxable, however this would show up on his statement from finance and accounting. They should have withheld a large sum of this as income tax.

The VA disability pay is not taxable. So your dad is now drawing his full VA disability pay and his full military retired pay. Since he received the lump sum, he must be 100% IU the same as I am.

You do not received anything from the VA for taxes, VA does not report anything to the IRS.

If you have more questions, please ask them.

May God richly bless and keep you and your family.

In His Service,

Grover

Actually Grover if the lump sum was from the VA it is not taxable. He would receive a 1099 if it is taxable. I believe the VA made payments for claims that where refused years ago and that the result of a law suit or congressional action required the back payments.