On Form 1099-R, there is a box below box 7 that says Check if disability and the taxpayer is disabled. Disability pensions for taxpayers who are under the minimum age for retirement are carried to line 7 of the 1040, and are considered earned income. This is according to IRS instructions. Please see IRS Publication 17 if you are unsure whether the taxpayer qualifies for this treatment of pension income.
Remove the X from below box 7 if the pension is not for disability. The amount will then carry to line 16 of the 1040.
This information applies to all years of the UltimateTax software.
