Yes, you can claim a refund of the taxes withheld on your tax return. To do this, you will need to enter your W-2 as you normally would, then you will take the following steps to remove offset the taxable income but still show the taxes withheld so they can be refunded.
- Click Federal
- Income and Expenses
- Show More next to Less Common Income
- Start next to Miscellaneous Income
- Start next to Other Reportable Income
- Enter Military Severance Reclassified as Disability for the Description
- Enter the amount reported in box 1 of your W2 as a negative number (ex -$40,000)
- Click done
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