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Military disability is not supposed to be taxable. Why did my refund drop significantly when I entered my military disability compensation?

 
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Military disability is not supposed to be taxable. Why did my refund drop significantly when I entered my military disability compensation?

If you receive VA disability income, then that income is not entered on a tax return.

 

If you receive military retirement income reported on a Form 1099-R then that is reported on a tax return.  Any compensation for disability received is not included in the retirement income on the Form 1099-R.

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