We updated Publication 3920 (Rev. September 2014), Tax Relief for Victims of Terrorist Attacks, under the heading "Disability Payments" to read as shown below. We are not revising the publication at this time. Disability Payments For tax years ending after September 10, 2001, do not include in your income any disability payments (including Social Security Disability Insurance (SSDI) payments) you receive for injuries incurred as a direct result of a terrorist attack directed against the United States (or its allies), whether outside or within the United States. In the case of the September 11 attacks, injuries eligible for coverage by the September 11 Victim Compensation Fund are treated as incurred as a direct result of the attack. However, you must include in your income any amounts that you received that you would have received in retirement had you not become disabled because of a terrorist attack. Accordingly, you must include in your income any payments you receive from a 401(k), pension, or other retirement plan to the extent that you would have received the amount at the same or later time regardless of whether you had become disabled. Retirement and profit-sharing plans. If you receive payments from a retirement or profit-sharing plan that does not provide for disability retirement, do not treat those payments as disability payments. The payments must be reported as a pension or annuity. Accrued leave payment. If you retire on disability, any lump-sum payment you receive for accrued annual leave is a salary payment. The payment is not a disability payment. Include it in your income in the tax year you receive it. See Pub. 525, Taxable and Nontaxable Income. Caution: Disability payments you receive for injuries not incurred as a direct result of a terrorist attack or for illnesses or diseases not resulting from an injury incurred as a direct result of a terrorist attack cannot be excluded from your income under this provision but may be excludable for other reasons. For details, see Publication 907, Tax Highlights for Persons with Disabilities. Example 1. Dan, a firefighter, was disabled as a direct result of the September 11 terrorist attack on the World Trade Center. He began receiving Social Security Disability Insurance (SSDI) benefits at age 54. Dan's full retirement age for social security retirement benefits is age 66. Dan's birthday is April 25. In the year Dan turned 66, Dan received $1,500 per month in benefits from the Social Security Administration. Because Dan became eligible for a full retirement benefit in May, the month after he turned 66, he can exclude only four months of his annual benefit from his income ($6,000). Dan must report the remaining $12,000 on the Social Security Benefits line on his tax return. He also must complete the Social Security Benefits Worksheet in his tax return instructions to find out if any part of the $12,000 is taxable. Example 2. John, a contractor, was disabled as a direct result of participating in efforts to clean up the World Trade Center area during the period after the September 11 attacks and before May 30, 2002 (making him eligible for compensation by the September 11 Victim Compensation Fund). He began receiving a disability pension at age 55 when he could no longer continue working because of his disability. By that time, John had already vested in his pension and would have been entitled to receive $2,500 per month as an early retirement benefit if he commenced receiving the benefit at age 55, or $3,000 per month as a normal retirement benefit if he commenced receiving the benefit at age 62, normal retirement age under the plan. The pension plan provides that a participant who retires early on account of disability is entitled to receive the participant's normal retirement benefit, which in John's case equals $3,000 per month. Accordingly, John may only exclude the $500 ($3,000 - $2,500) received on account of disability from his income for each month until John reaches normal retirement age. John must report the remaining $2,500 per month on the pensions and annuities line on his tax return. For each month after attaining age 62, John must report the full amount of his monthly pension benefit on the pensions and annuities line on his tax return.