If you're referring to Dependency and Indemnity
Compensation, the monthly benefit paid to eligible survivors of military
service members who died in the line of duty, or eligible survivors of Veterans
whose death resulted from a service-related injury or disease, do
not report this anywhere on your return. Even though these payments are non-taxable,
entering them anywhere on your return could affect the taxability of other
income, such as Social Security.
See “Veterans' benefits” in IRS Publication 525, Taxable
and Nontaxable Income.
