Non taxable Military Disability Pay and needing pr...
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atfrasier8
New Member

Non taxable Military Disability Pay and needing proof showing no taxable income?

Hello,

 

I receive 100% disability pay from the military, this pay is non taxable or reported as income so I have not filed income in many years.   My spouse works and filed married filing separate, in order to get a medical discount for her and her children through her employer they are requiring the tax refund.   She sent my disability award letter but her employer is stating they need me to file a 2019 tax return but I don't receive W2's.   They need something showing I have no taxable income.   How do I go about doing this or file with no W2?

2 Replies
xmasbaby0
Level 15

Non taxable Military Disability Pay and needing proof showing no taxable income?

Why are you and your wife filing separately?  You lose a lot of credits by filing MFS.  You could file a joint return even if one spouse has little or no income.  You could file a joint return and not enter your veterans benefits since they are not taxable.

 

If you were legally married at the end of 2019 your filing choices are married filing jointly or married filing separately.

Married Filing Jointly is usually better, even if one spouse had little or no income. When you file a joint return, you and your spouse will get the married filing jointly standard deduction of $24,400 (+$1300 for each spouse 65 or older)  You are eligible for more credits including education credits, earned income credit, child and dependent care credit, and a larger income limit to receive the child tax credit.

 

If you choose to file married filing separately, both spouses have to file the same way—either you both itemize or you both use standard deduction. Your tax rate will be higher than on a joint return. Some of the special rules for filing separately include: you cannot get earned income credit, education credits, adoption credits, or deductions for student loan interest. A higher percent of your Social Security benefits may be taxable. Your limit for SALT (state and local taxes and sales tax) will be only $5000 per spouse. In many cases you will not be able to take the child and dependent care credit. The amount you can contribute to a retirement account will be affected. If you live in a community property state, you will be required to provide additional information regarding your spouse’s income. ( Community property states:  AZ, CA, ID, LA, NV, NM, TX, WA, WI)

If  you are using online TurboTax to prepare your returns, you will need to prepare two separate returns and pay twice.

 

https://ttlc.intuit.com/questions/1894449-married-filing-jointly-vs-married-filing-separately

https://ttlc.intuit.com/questions/1901162-married-filing-separately-in-community-property-states

https://ttlc.intuit.com/questions/1894449-is-it-better-for-a-married-couple-to-file-jointly-or-separ...

 

 

 

TurboTax cannot provide you with anything that says you do not have taxable income,  You could get a transcript from the IRS showing that you did not file a return  -- not sure if that would satisfy the employer.

 

The kind you would request would be a verification of non-filing.

https://www.irs.gov/individuals/tax-return-transcript-types-and-ways-to-order-them

Verification of Non-filing Letter - provides proof that the IRS has no record of a filed Form 1040, 1040A or 1040EZ for the year you requested. It doesn't indicate whether you were required to file a return for that year. This letter is available after June 15 for the current tax year or anytime for the prior three tax years using Get Transcript Online or Form 4506-T. You must use Form 4506-T if you need a letter for tax years older than the prior three years.

 

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
Carl
Level 15

Non taxable Military Disability Pay and needing proof showing no taxable income?

Disability pay made to you by the VA is not taxable or reportable on any tax return, and never has been. That's why you don't receive any type of tax reporting document from the VA for that income. It would seem apparent to me that the employer is not aware of this.  See this IRS website at https://www.irs.gov/individuals/information-for-veterans paying specfic attention to the paragraph that starts with "VA Disability Benefits" (about halfway down the page).

If necessary, refer the employer to that "OFFICIAL" IRS website.

Now I'm not sure how your letter from the VA reads for a 100% disability, as I have only a 10% disability and my letter specifically and explicitely states the income is not reportable on the federal tax return, but it may be included for the "sole and only purpose" of determining my deduction for sales taxes paid.  My disability pay does not increase my AGI under any circumstances.

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