Military Tax Software | TurboTax Military | Military Tax Extension | Military Pay | Injured | Survivors | Spouses

Military Injury Benefits

Military disability benefits include compensation that is a monthly tax-free benefit paid to Veterans who are at least 10% to 100% disabled due to injuries and diseases that were incurred or aggravated while on active duty, active duty training, or inactive duty training. Disabilities can be due to physical or mental health conditions including, post-traumatic stress disorder (PTSD).

Military Injury and Disability Compensation

Veteran's Disability Benefits

Here is how the Department of Veterans Affairs (VA) calculates disability compensation rates for qualifying veterans.

Disability benefit payments are calculated based on what injury range you fall into.

Based on how disabled you are, the VA makes a determination as to the severity of your disability based on the evidence submitted with your claim, or obtained from military records.

VA disability rates range from 0% to 100% in 10% increments (10%, 20%, 30% etc.).

The VA also calculates additional disability percentage amounts in certain instances for multiple disabilities when needed. Injured veterans may qualify for additional disability benefits if any of the following apply:

  • They have severe disabilities or loss of limb(s)
  • They have a spouse, child(ren), or dependent parent(s)
  • They have a seriously disabled spouse

The Department of Veterans Affairs determines and distributes a wide range of benefits for Injured Veterans, including those related to disability, pensions, and severance pay. There are many benefits that injured veterans may qualify for to help them physically, as well as financially when it's time to file their income tax return.

The amount granted for Veteran's Disability Benefits is determined based on a graduated scale according to the severity of the disability from 10 to 100 percent. Additional disability compensation may also be available for disabilities related to disabilities that occurred in service, and for disabilities related to military service, even if they arise after service.

An entitlement letter will be provided to veterans once the VA has granted their disability status. This letter will outline the percentage of disability and what monthly compensation amount has been granted.

Until the entitlement letter is received, any retirement pay received must be included on your federal and state tax returns. After the letter arrives, you can amend previously filed tax returns to reduce the taxable income by the monthly amount of VA compensation that was granted. You must attach a copy of the VA entitlement letter and Form DD-214 when filing amended tax returns or making any adjustment on your federal or state income tax returns.

Monthly Disability Pension Support

Wartime veterans with limited income who are permanently or totally disabled, or over 65 years old, may also be able to qualify and apply for monthly military pensions support.

These benefits are exempt from federal and state income taxes.

U.S. Armed Force Members that were injured on active duty can choose to receive an optional lump-sum disability severance payment when they are discharge from Military Service. When a disability is received from combat duty related activities, veterans may be eligible to receive a monthly disability pension from the VA.

Beware, a lump-sum severance payment is treated as an overpayment of your disability benefits under current VA guidelines. In this case, no compensation payments will be issued by the VA until the monthly entitlement amount becomes equal to the awarded lump-sum amount, comparatively reducing it to $0.

When choosing to receive a lump-sum disability severance payment, upon discharge the full lump-sum becomes taxable for the tax year you received it in. However, if at a later date you are granted a VA entitlement, you may be eligible to subtract the lump-sum disability severance payment by amending your previously filed tax return. In this case you will need to submit a photocopy of your VA entitlement letter and Form DD-214 along with the amended tax return.

Submitting an application for disability compensation after you have retired from active duty will generally be followed by receiving military retirement compensation prior to entitlement payments from the Department of Veterans Affairs.

Beware that the application process may take a minimum of six months through the VA. Veterans that are interested in receiving compensation or pension payments should keep this time frame in mind when deciding when to apply for benefits.

DD-214 Discharge Papers, Separation Documents

A Report of Separation contains information that is used to verify military personnel service records for benefits, retirement, employment and membership in veterans' organizations as needed.

A Report of Separation is generally issued after a service member performs their active duty for a minimum of 90 consecutive days in active duty training. Veterans who have misplaced or lost a DD-214 can gain access to their DD-214 online at: http://vetrecs.archives.gov/

Military Taxation 2017 - 2018

Army, Navy, Air Force, Marines, Coast Guard

MilitaryTaxSoftware.Com

SiteMap | xml-map

Military Tax Software | TurboTax Military | H&R Block Military | More Military Tax Filing Options | Top Military Tax Deductions

(c) Website Copyright Protected All Rights Reserved