Veterans tax fairness claim information is not available at the IRS website IRS.GOV The Combat Injured Veterans Tax Fairness Act of 2016, enacted December 2016, allows certain veterans who received lump sum disability severance payments additional time to file a claim for credit or refund of an overpayment attributable to the disability severance payment. The law directed the Secretary of Defense to identify disability severance payments paid after January 17, 1991, that were included as taxable income on Form W-2, Wage and Tax Statement, but were later determined to be nontaxable and to provide notice of the amount of that payment. The Department of Defense is mailing letters to affected veterans in July of 2018.
Veterans tax fairness claim information can be a valuable resource for veterans impacted by this type of income distribution. Veterans discharged from military service due to medical disability may receive a one time lump sum severance payment. Disability severance pay is taxable income unless the pay results from a combat related injury or the service member receives official notification from the Department of Veterans Affairs approving entitlement to disability compensation.
Anyone who received a disability severance payment that was taxed and determines later that the payment qualifies under one of the rules above can file a claim for credit or refund for the tax year in which the disability severance payment was made and was included as income on a tax return. For veterans who received a lump sum payment after January 17th, 1991, the Combat Injured Fairness Act of 2016 may provide additional time for claim a refund or for the overpayment attributable to the disability severance payment.
You must complete and file IRS form 1040X, Amended U.S. Individual Income Tax Return to apply for this, for the tax year the disability severance payment was made carefully following the instructions in the notice mailed by the Department of Defense in July of 2018. You must mail the claim generally by the later of , 1 year from the date of the Department of Defense Notice, 3 years from the date of filing of the original return, or 2 years after the tax was paid for the year the disability severance payment was made.