Compensation and Tax Issues

A category covering issues with compensation and taxation of benefits.

Disability Severance Pay?

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I just wanted to start a new thread on disability severance pay and how it works as it seems many people on here have questions about it, including me, but aren’t getting solid answers. Please provide any input you have on this topic to help others out. What I know about it is you should receive it somewhere around 20 business days after your separation date. If you were rated at 0% for your referred condition they won’t recoup any of the severance pay and I believe I’ve heard of your rates 100% by the VA they won’t recoup any of it either, correct me if I’m wrong. You also won’t be taxed on it if your referred condition is combat related or if you are receiving any monthly compensation from the VA. It is otherwise taxed at 22% Federal tax. If your severance pay is taxed you can receive a refund from DFAS by submitting a claim online at https://www.DFAS.mail/debt and claims/submit claim.html To submit a refund claim you will need your DD214 (member copy 4), The entire...
Recoupment and Taxes? Disability Severance Pay.

Good News: "More than 133,000 vets may qualify for this tax refund windfall"

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Dollars Tax refund.jpg More than 133,000 vets may qualify for this tax refund windfall From Army Times. By Karen Jowers. "More than 133,000 veterans may qualify for a refund of federal taxes they paid on disability severance pay dating back to 1991 ― taxes that shouldn’t have been collected in the first place. Within the next month, Defense Department officials will send notification letters to veterans that they may be eligible for the refund, said Army Lt. Col. David Dulaney, executive director of the Armed Forces Tax Council. Eligible veterans will have a year after they receive the notice to file a claim for the refund. These refunds, which are the result of a law passed in 2016, apply to veterans who received this pay dating back to Jan. 17, 1991, with taxes withheld, and who also qualified for disability...

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