Few things bring tears to my eyes faster than sitting down with disabled combat vets and hearing their story. These folks have seen it all, given it all, and sometimes suffer silently, yet their love for this country never waivers! We owe so much to them and can never fully repay this debt.
In late 2016, Congress passed the “Combat-Injured Veterans Tax Fairness Act.” The purpose of this was to correct an unfair situation for combat veterans who received disability severance payments after Jan. 17, 1991, and incorrectly included those payments as income on their personal income tax returns.
The act gives these veterans the ability to amend their prior tax returns (from 1991 to 2016). The amended returns would be taking out the disability severance payments as income, thus creating potential refunds. (Normally, a taxpayer can only amend a return for the prior three years to receive a refund). This option might get the most refund, but if the combat vet didn’t keep a copy of the original filed tax returns, it’s difficult to properly amend it.
The act also provided a “simplified method” for getting refunds. Instead of trying to fill out your amended Federal Income Tax Return, form 1040x with all the original filed data, etc., for each applicable year, veterans can submit a claim based on a standard refund table for each year they believe they reported their disability severance as income. All they have to do is file the Form 1040x for each applicable year, attach a copy of the DoD letter and write “DISABILITY SEVERENCE PAY” on line 15 of the form 1040x and write in the amount listed below based upon which year you’re filing the claim for:
$1,750 for tax years 1991-2005; $2,400 for tax years 2006-2010; $3,200 for tax years 2011-2016
No matter which method is used, in order to claim this refund from this Congressional Act, a veteran must mail the claim generally within one year of receiving a Department of Defense notice informing them of this act. (Letters went out in July 2018).
If you’re a combat-injured veteran who received disability severance and reported it as income on your original Income Tax Return, and you didn’t get a letter from the DoD, you should go to the Defense Finance and Accounting Service webpage at https://www.dfas.mil/dsp_irs.
For information directly from the IRS, go to the combat-injured disabled veterans IRS webpage. Get ready, it’s a rather long web address —
Did you hear, 2 Samuel 23:17, King David speaking in honor of some of his “Mighty Men” said, “Far be it from me, O LORD, that I should do this. Shall I drink the blood of the men who went at the risk of their lives?”
Kelly Bullis is a Certified Public Accountant in Carson City. Contact him at 882-4459. On the web at BullisAndCo.com. Also on Facebook.