Combat-injured veterans running out of time to claim tax refunds up to $3,200
By PAUL MUSCHICK | The Morning Call (Allentown, Pa.) | Published: July 16, 2019
(Tribune News Service) — Veterans who were injured in combat or were disabled due to their military service may have overpaid taxes and are getting a one-time opportunity to seek refunds.
But they must act soon.
The federal government incorrectly considered lump-sum disability severance payments made to some veterans to be taxable. The payments are taxable in some cases but not when the pay results from a combat-related injury, or if the veteran is approved for Department of Veterans Affairs disability compensation, according to the IRS.
Congress enacted a law in 2016 to give veterans whose payments were taxed improperly additional time to request a refund, or a tax credit.
Last July, the Department of Defense mailed letters to about 130,000 veterans advising them of their right. To claim a refund, the one-time lump disability payments must have been received after Jan. 17, 1991, and before Jan. 1, 2017.
Taxpayers usually can claim refunds only within three years of filing a tax return. The law gives veterans one year from the date they received the notice from the Department of Defense to file, meaning some veterans may be able to claim refunds for taxes they paid back to 1991.
Tax form 1040X, “Amended U.S. Individual Income Tax Return,” must be filed to request the refund or credit. Filers should write “Veteran Disability Severance” or “St. Clair Claim” across the top of the form, according to the IRS.
The tax form, and a copy of the Department of Defense notice about their refund eligibility, should be mailed to: Internal Revenue Service, 333 W. Pershing Street, Stop 6503, P5, Kansas City, MO 64108.
Veterans can claim the actual amount of their disability severance pay, or if they no longer have documents showing that amount and don’t want to obtain them, they can file for a standard refund.
The standard refund amounts are $1,750 for tax years 1991 to 2005; $2,400 for tax years 2006 to 2010; and $3,200 for tax years 2011 to 2016.
Veterans who did not receive a notice still may be eligible to claim a refund.
The IRS says they should contact the National Archives, National Personnel Records Center or the VA to obtain the documents necessary to support their claim. They need paperwork showing the amount of the severance and the reason for it, or a letter documenting that the VA has declared them eligible for disability compensation.
More information is available at irs.gov or by calling the IRS at 833-558-5245 x378.
Veterans service organizations also may be able to offer advice.