Paperwork for severance tax recoup

From the IRS:

Filing Amended Returns for Combat-Injured Disabled Veterans | Internal Revenue Service Amended Return

File IRS Form 1040X, Amended U.S. Individual Income Tax Return, for the year the disability severance payment was made. Include both of the following:

1. A copy of documentation showing the exact amount of and reason for your disability severance payment, such as a letter from the Defense Finance and Accounting Services (DFAS) explaining the severance payment at the time of the payment or a Form DD 214, and

——->2. A copy of either the VA determination letter confirming your disability or a determination that your injury or sickness was either incurred as a direct result of armed conflict, while in extra-hazardous service, or in simulated war exercises, or was caused by an instrumentality of war. [award letter received in mail]

I am unaware of an eBenefits letter that contains that info. However, in my case, at least one document makes reference to Agent Orange.

Good luck,
Ron

 
It says you need your VA award documentation. I assumed that would be on ebenefits. All of my docs now still say proposed. Would this be the documentation do you think?
 

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You will not find your award letter on eBenefits. Was your severance taxed? You will have to await your finalized ratings.
 
When was it paid, prior to 12/31/2018 or between 1/1/2019 and today?
 
Your proactivity has sent you down the path of misinformation.

You will not be filing for a tax refund, since you did not pay taxes in 2018 on a severance that you have not gotten.

Instead you will request a refund from DFAS (in the event that they withhold tax from your severance) which they should not.
 
gsfowler, maybe you can answer my question. Back in the summer of 2018, letters were sent out to vets who had their severance pay taxed and it included instructions on how to get it back from DFAS or the IRS depending on the year of your severance and situation. Since then, are they still taxing severances for those who medically separate? I'm on TDRL and may possibly be getting removed and given a severance. I'm just wondering if they are processing things differently or if I should expect my severance to be taxed. It's obvious that I shouldn't be taxed on it but wondering if DFAS has started processing this situation appropriately. Thank you for any insight.
 
They are not supposed to tax the severance if you are being rated by the VA for the exact same code/condition that you are receiving severance for. They are also not supposed to tax the severance if your disability that you are getting severance for occurred in a tax free combat zone. Additionally they are not supposed to tax a severance if you are rated at 0% for all conditions that you are receiving severance for.

As far as point number one, there is the potential that you will fall through the cracks and be taxed because DFAS and the VA have challenges communicating. Additionally when you are severed, the VA rating is typically just proposed. If on TDRL and you receive severance, the rating should be finalized therefore no tax.

Here is what I stated above, direct from the DFAS webpage. https://www.dfas.mil/dsp_irs.html
 
Thank you gsfowler! Appreciate it!
 
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