Has anyone heard about new legislation stating if you are 100% disabled they would not recoup the severance pay? My VA rep said he had to do some more research but said he had 3 members all 100% disabled say they are not having their severance pay recouped. Anyone know or heard about this?
Also was digging through Financial Managment Regulations (I know fun right). Ill put in Bold what I found.
DoD 7000.14-R Financial Management Regulation Volume 7A, Chapter 35
5.4 Taxability and Withholding
5.4.1. General. Disability severance pay is normally taxable income. However, it is not subject to tax withholding or reporting if at least one of the following two conditions exists:
5.4.1.1. The entitlement resulted from combat-related injury or illness, as determined by the Secretary of the Military Department concerned, which happens as a result of any of the following activities:
5.4.1.1.1. As a direct result of armed conflict;
5.4.1.1.2. While performing extra-hazardous service, even if the service does not directly involve combat;
training; or
5.4.1.1.3. Under conditions simulating war, including maneuvers or
5.4.1.1.4. By an instrumentality of war, such as weapons; or
5.4.1.2. The member is entitled to disability compensation as determined by the VA or has received a proposed disability rating from the VA at the time of separation through the Integrated Disability Evaluation System.
So does that mean because I received a VA rating my DWSP does not count as income and is not taxable? DFAS should give me the full amount then correct? Anyone else recently go through this?