Q. I am a 52-year-old FERS clerk working for the Postal Service. I was been diagnosed with Parkinson’s disease in November 2005. I am wondering about a disability retirement and how the money I am paid, if approved, is taxed or not?
A. The Internal Revenue Service considers CSRS and FERS disability annuities taxable income. If you were also approved for a Social Security disability benefit and judged by them to be totally disabled for any gainful employment, then your benefits would be tax-free.