Disability benefits received from VA, such as disability compensation, pension payments and grants for home modifications, are not taxable.
Publication 501, Dependents, Standard Deduction, and Filing Information, has all the details, but here are the things that affect whether an individual is required to file a tax return.
Gross income. Gross income means all income an individual received in the form of money, goods, property and services that aren't exempt from tax. This includes any income from sources outside the United States or from the sale of a main home, even if a taxpayer can exclude part or all of it.
Required filing threshold. Taxpayers will need to see if their gross income is over the required filing threshold. Filing statuses have different income thresholds, so taxpayers may need to consider their potential filing status as well.
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