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I am a vetran that recessives compensation at 100% from the VA it is service connected disabillity. Do i file a tax return

 
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6 Replies

I am a vetran that recessives compensation at 100% from the VA it is service connected disabillity. Do i file a tax return

YES!! Any income has to be filed.

I am a vetran that recessives compensation at 100% from the VA it is service connected disabillity. Do i file a tax return

i dont work at all i  am permanent totally disabled
MinhT
Expert Alumni

I am a vetran that recessives compensation at 100% from the VA it is service connected disabillity. Do i file a tax return

Your service-connected disability income may be partially or totally excluded from taxation, depending on its nature.

Please see this extract of IRS Publication 525 to see if you qualify.

Military and Government Disability Pensions

Certain military and government disability pensions are not taxable.

Service-connected disability.   You may be able to exclude from income amounts you receive as a pension, annuity, or similar allowance for personal injury or sickness resulting from active service in one of the following government services.
  • The armed forces of any country.

  • The National Oceanic and Atmospheric Administration.

  • The Public Health Service.

  • The Foreign Service.

Conditions for exclusion.   Do not include the disability payments in your income if any of the following conditions apply.
  1. You were entitled to receive a disability payment before September 25, 1975.

  2. You were a member of a listed government service or its reserve component, or were under a binding written commitment to become a member, on September 24, 1975.

  3. You receive the disability payments for a combat-related injury. This is a personal injury or sickness that:

    1. Results directly from armed conflict,

    2. Takes place while you are engaged in extra-hazardous service,

    3. Takes place under conditions simulating war, including training exercises such as maneuvers, or

    4. Is caused by an instrumentality of war.

  4. You would be entitled to receive disability compensation from the Department of Veterans Affairs (VA) if you filed an application for it. Your exclusion under this condition is equal to the amount you would be entitled to receive from the VA.

Pension based on years of service.   If you receive a disability pension based on years of service, in most cases you must include it in your income. However, if the pension qualifies for the exclusion for a service-connected disability (discussed earlier), do not include in income the part of your pension that you would have received if the pension had been based on a percentage of disability. You must include the rest of your pension in your income.
Retroactive VA determination.   If you retire from the armed services based on years of service and are later given a retroactive service-connected disability rating by the VA, your retirement pay for the retroactive period is excluded from income up to the amount of VA disability benefits you would have been entitled to receive. You can claim a refund of any tax paid on the excludable amount (subject to the statute of limitations) by filing an amended return on Form 1040X for each previous year during the retroactive period. You must include with each Form 1040X a copy of the official VA Determination letter granting the retroactive benefit. The letter must show the amount withheld and the effective date of the benefit.   If you receive a lump-sum disability severance payment and are later awarded VA disability benefits, exclude 100% of the severance benefit from your income. However, you must include in your income any lump-sum readjustment or other nondisability severance payment you received on release from active duty, even if you are later given a retroactive disability rating by the VA.
Special statute of limitations.   In most cases, under the statute of limitations a claim for credit or refund must be filed within 3 years from the time a return was filed. However, if you receive a retroactive service-connected disability rating determination, the statute of limitations is extended by a 1-year period beginning on the date of the determination. This 1-year extended period applies to claims for credit or refund filed after June 17, 2008, and does not apply to any tax year that began more than 5 years before the date of the determination.

Example.

You retired in 2009 and receive a pension based on your years of service. On August 3, 2015, you receive a determination of service-connected disability retroactive to 2009. Generally, you could claim a refund for the taxes paid on your pension for 2012, 2013, and 2014. However, under the special limitation period, you can also file a claim for 2011 as long as you file the claim by August 3, 2016. You cannot file a claim for 2009 and 2010 because those tax years began more than 5 years before the determination.

Terrorist attack or military action.   Do not include in your income disability payments you receive for injuries resulting directly from a terrorist or military action. However, you must include in your income any amounts that you received that you would have received in retirement had you not become disabled as a result of a terrorist or military action. Disability payments you receive for injuries not incurred as a direct result of a terrorist or military action or for illnesses or diseases not resulting from an injury incurred as a direct result of a terrorist or military action may be excludable from income for other reasons. See Pub. 907, Tax Highlights for Persons with Disabilities.   A terrorist action is one that is directed against the United States or any of its allies (including a multinational force in which the United States is participating). A military action is one that involves the armed forces of the United States and is a result of actual or threatened violence or aggression against the United States or any of its allies, but does not include training exercises.

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I am a vetran that recessives compensation at 100% from the VA it is service connected disabillity. Do i file a tax return

Hello 

I am looking for steps on how to fill out a 1040 for amended for 100 percent disable veteran connected services for the taxes paid on my retirement. I would like to amend 2015 to 2018 being that I just became aware of this.  

ronstein
Returning Member

I am a vetran that recessives compensation at 100% from the VA it is service connected disabillity. Do i file a tax return

I receive disability from VCAP. Do I include this on both state (Oregon) and federal returns? 

I am a vetran that recessives compensation at 100% from the VA it is service connected disabillity. Do i file a tax return

There is no income tax on VA compensation and you do not enter it on your return.  

 

We'd love to help you complete your tax return, but need more information. Can you please clarify your question? 

What VCAP program are you receiving income from and what Form is the income reported on?

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