Tax refund after severance

NACnomore

NACnomore

PEB Forum Regular Member
PEB Forum Veteran
So I've read alot of the old threads about recieving the with held taxes back, the link is dead though to the form.

I did the BDD benefits delivery on discharge. Supposedly I'll get my VA verification on 12/12 (60 days after I separated) and I can submit the form.

My question though is for any one who went through this before. Will the severance effect my W2 and return I file next year since they won't have it straight yet?
 
NACnomore said:
So I've read alot of the old threads about recieving the with held taxes back, the link is dead though to the form.

I did the BDD benefits delivery on discharge. Supposedly I'll get my VA verification on 12/12 (60 days after I separated) and I can submit the form.

My question though is for any one who went through this before. Will the severance effect my W2 and return I file next year since they won't have it straight yet?
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Not sure what your question is. But any income/taxes paid, received/paid in 2010 will be counted towards your 2010 taxes.
 
xeno said:
Not sure what your question is. But any income/taxes paid, received/paid in 2010 will be counted towards your 2010 taxes.
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Well my question is since this is supposed to be a non taxable VA benefit is it still going to change my tax bracket? Will I have to amend my taxes after I receive the severance taxes back? This is not income.
 
I think you won't amend your taxes unless by the time you file you still report the money as withheld as taxable and you have not actually received the full amount. If you already received the money, then you will file with that information. I don't know for sure if this is still the case, but I recall some folks posting that they could not get DFAS to issue an updated W2. You may want to check with a tax advisor on this if you are unclear.

About the link: Refund of Disability Severance Tax - Downloads - Physical Evaluation Board Forum Are you having problems with this? I had posted a different link somewhere else, but this was posted last week and I see that 6 people have downloaded, so it seems to work.
 
So I got my W2 and paid my taxes. It was all taxable, probably mess up my FASFA. I paid more in state taxes this year than federal. I don't know if I'll get any of the money back that was taken out of the severance yet or not, the VA is taking forever to process my claim.
 
My W2 did not include severance pay. At any rate, your severance is not taxable. See IRS pub 17 pg 52 that states "If you receive a lump-sum disability severance payment and are later awarded VA disability benefits, exclude 100% of the severance benefit from your income. However, you must include in your income any lump-sum readjustment or other nondisability severance payment you received on release from active duty, even if you are later given a retroactive disability rating by the VA."

If you don't get your VA rating this year, you can always file an amended return.
 
brnt said:
My W2 did not include severance pay. At any rate, your severance is not taxable. See IRS pub 17 pg 52 that states "If you receive a lump-sum disability severance payment and are later awarded VA disability benefits, exclude 100% of the severance benefit from your income. However, you must include in your income any lump-sum readjustment or other nondisability severance payment you received on release from active duty, even if you are later given a retroactive disability rating by the VA."

If you don't get your VA rating this year, you can always file an amended return.
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It's looking likely I may not get it this year. I was told that because they screwed it up my case went from stage 2 to 1, back to 2 and is at the bottom of the pile behind all of the people that got out after me, or got in the pilot program that started 7 days after my MEB was initiated. Love the VA and governments backwards thinking.
 
I just posted this in another thread. My wife received Severence Pay. She seperated Nov 10. We filed our taxes this year and the Severence Pay was part of our income since we received it in Dec 10. Once we received our taxes back we filed a amendment to our taxes for the amount taxed from her severence pay. H&R Block did all the paperwork. They used the US vs St. Clair case for it and we sent it in. Takes a long time to process. We're on week 8 and they said it takes between 12 and 16 weeks.
 
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