You must be totally and permanently disabled, unable to be gainfully employed in any capacity, and you must be receiving income from a disability retirement plan and be eligible for the homestead exemption under Section 12-37-250 to qualify. You do not qualify if you are receiving disability income from one job while you are able to perform another job. You must have a physician's statement establishing that you are permanently and totally disabled.
The deduction is limited to payments received from retirement plans. Payments from disability plans which are not retirement plans are not eligible for the deduction. Third party sick pay reported on a W-2 (W2) does not qualify for the disability retirement deduction.
A surviving spouse may take a disability retirement deduction for amounts received in the year the disabled spouse died. For subsequent years, a surviving spouse is not eligible for the disability deduction.