Combat-injured veterans may be owed a tax credit or refund. Tax Day is less than a month away.
The Combat-Injured Veterans Tax Fairness Act was passed in 2016. The act affects veterans who received disability severance payments after January 17, 1991 and included that payment as income. If you qualify, learn more below.
What The Combat-Injured Veterans Tax Fairness Act Means For You
Veterans who were discharged from military service due to medical disability sometimes receive a one-time lump sum severance payment. This payment is deemed as taxable income unless the pay was awarded from a combat-related injury.
Anyone who received a disability severance payment that was taxed and determines later that the payment qualifies under one of the rules above can file a claim for credit or refund for the tax year in which the disability severance payment was made and was included as income on a tax return.
How to Get Your Money From the Combat-Injured Veterans Tax Fairness Act
To receive a refund from this taxation, you must complete and file an IRS Form 1040X for the tax year from which the severance payment was made. There are time stipulations which are explained below.
- 1 year from the date of the Department of Defense notice, or
- 3 years after the due date for filing the original return for the year the disability severance payment was made, or
- 2 years after tax was paid for the year the disability severance payment was made.
If you did not receive the notice from the Department of Defense and you received a disability severance payment after January 17, 1991, that you reported as taxable income, you can still file a claim as long as you attach the necessary documentation to your Form 1040X.
For more information on how to file an amended tax return, visit the IRS website on disability severance pay.