As a 100% disabled veteran, must I file a tax return?

[1cris4me]

What rule or regulation in IRS code exempts Vets receiving disability payments from filing tax returns?

[1cris4me]

Can you specific rule or regulation in IRS code exempts which Vets receiving disability payments from filing tax returns?

[1cris4me]

Can you specific rule or regulation in IRS code exempts which Vets receiving disability payments from filing tax returns?

[Carl]

There is no rule that exempts vets with a 100% disability from filing a tax return. Never has been either. But as I'm sure you already know, all disability pay you receive from the VA is not taxable or reportable on any tax return. Not ever. So if disability pay is your only source of income for the entire year, then you don't need to file a tax return at all.
But if you receive any income during the year from other sources, then depending on the type of income as well as the amount of that income, you could be required to file a tax return. But even then, you would not include your VA disability pay on that return.

[Carl]

If the only source of income to be reported on a tax return is income received from the veterans administration and/or social security (SSA-1099), then you don't need to file at all. However, if you do have reportable income, the VA pay is not reportable and is not included on any tax return.

[karajora2]

Now how do i change last years they want 50 bucks 4 copy

[KarenJ]

Please see this great answer by TurboTax Doninga:

If you have Social Security Disability payments, they would be reported on a federal tax return, however, if Social Security is the only income that you would be reporting, a federal tax return does not have to be filed. However, if you do have any other income to report, then enter the benefits reported on SSA-1099. VA disability payments are not reported on your return.

To enter your Social Security benefits reported on form SSA-1099

• Click on Federal Taxes (Personal using Home and Business)
• Click on Income and Expenses (Personal Income using Home and Business)
• Click on I'll choose what I work on
• Scroll down to Retirement Plans and Social Security
• On Social Security (SSA-1099, RRB-1099), click the start or update button

[Edited 01.26.18 / 2:56pm]

[KarenJ]

Please see edited response.

[Jerryw6313]

I have been 100% disabled since 2012 . Is it possible to amend those returns from the past?

[Carl]

While there is no limitation if you owe taxes, the IRS has a three year statute of limitations on refunds. They will only honor refunds on an amended return for the current tax year and three years back. So for you, anything you may be owed for a 2015 return or older can be filed - but you will *NOT* be paid it. So don't waste the time.

Also, for 2016-18 if you are prior military I would "highly" suggest you visit your local VA office (right now, during tax season) for help with this. If you use TurboTax to amend a past year's return it's going to cost you money. The VA folks can help you with this for free.

Additionally, as a either an honorably discharged or medically discharged under honorable conditions, you also qualify for the services of the local "Retires Activities" office (RA Office) if there's a base or other military activity near so that has that. The RA office is very busy this time of year with qualified vets this time of year, with tax related matters. It's also free.

[bama_777]

The 525 Law allows 100% VA Disabled veterans from having to pay federal income taxes on Military Retirement Pay and the VA Pension.  I had to file 2 amended tax returns this year because Turbo Tax did not recognize this law...cost me $950 to have a tax professional to refile my returns.  I have used Turbo Tax for 7 years, not sure I will use it anymore if they do not have the 525 Law in their software.  I am 100% VA Disabled and Turbo Tax makes me pay Federal Income Tax on my Military Retirement Pay...causes me to owe at the end of the year.  This should not happen - is the Turbo Tax software updated this year?

[DMarkM1]

Since you are 100% VA rated you should be receiving your military retirement pay and VA disability pay (concurrent receipt).  Your VA disability under Publication 525 is not taxable.  However your military retirement is taxable under Publication 525.  

Here is a link with discussion on the topic.  If you are not receiving disability pay but only military retirement pay and you had a 100% disability rating then you would exclude your retirement pay from taxable income under Publication 525 rules. 

The DoD and VA should have automatically changed your pay when the concurrent receipt laws passed in 2003.  You should therefore be receiving a form 1099-R for your retirement pay which is entered into TurboTax and taxable.  You VA disability pension is not reported on any tax forms and does not go on your tax return at all.

[S Stout]

DMarkM1,

I have read your March 2, 2020 response a few times and understand your point that retirement pay is taxable. However, I have several retired friends that state your answer is not true. Both have filed W-4's with DFAS stating in block 4(c), "Exemption for 100% Disabled Veteran." Both confirmed that DFAS received, processed their W-4's and stopped their tax withholdings. 

Again, I have personally read both IRS publications 524 and 525, but I cannot find in either where it states, 100% disabled veterans retired pay "will not" be taxed. However, on page 18 of 525, it does state, "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."

Could you please direct me to the source(s) where you got your information. In my opinion, both IRS publications are vague and subjective.

Thanks in advance for your response.

[DMarkM1]

Here is a link to a DFAS answer.  If a military member receives disability pay from the military service as determined by the military branch in DOD upon retirement, then the pay is non-taxable and will not be included on a form 1099R.  After retirement, the retiree receives a letter from the service that explains the type of pay (disability retirement ((non taxable)) or retirement ((taxable)).  

Any taxable retirement pay based on length of service is taxable and reported on a 1099R. 

Separately if the VA determines a disability rating and the military member receives VA disability pay, that pay is non-taxable and not reported on a 1099R. 

The concurrent receipt of military retirement (taxable) and VA disability (non-taxable) is common. 

Stopping withholding from retirement pay does not make the pay non-taxable; it is only stopping withholding throughout the year.

Bottom line if the retiree is getting a form 1099R that is reportable on a tax return.