The Department of Defense (DoD) began notifying veterans that they may eligible for an immediate tax refund. Under federal law, veterans who suffer combat-related injuries and who are separated from the military are not supposed to be taxed on the one-time lump sum disability severance payment they receive from the military.
Unfortunately, for years, the DoD improperly withheld taxes on these payments from thousands of unsuspecting veterans, who were typically unaware that their benefits were being improperly reduced.
Earlier this month, the DoD began notifying veterans that they may be due a refund.
Affected veterans can submit a claim based on their actual disability severance payment by submitting an IRS Form 1040X, the Amended U.S. Individual Income Tax Return.
The IRS also has approved a simplified method for obtaining the refund, in which veterans can claim the standard refund amount on Form 1040X based on when they received the disability severance payment. Those standard refund amounts are:
- $1,750 for tax years 1991 to 2005,
- $2,400 for tax years 2006 to 2010, and
- $3,200 for tax years 2011 to 2016.
Estates or surviving spouses can file a claim on behalf of a veteran who is now deceased.
You may be eligible for this refund even if you have not received a letter from the DoD. Visit the IRS website and search “combat injured veterans” for further information.
If you need help filing your amended return, please contact us and we can take care of it for you.