Proper Reporting Military Disability Retirement Income
BECKY: Hi. I´m Becky, and I work for the IRS.
Are you, or is someone you know a disabled veteran currently receiving a pension or disability income?
If so, you or they may be eligible to claim a federal tax refund if there has been an increase in your percentage of disability from the Veterans Administration, or you´ve been granted Combat-Related Special Compensation after an award for Concurrent Retirement and Disability.
Either event could be the basis for filing an amended tax form that could result in a tax refund.
As a disabled veteran, you or your hired tax professional will need to complete Form 1040X, Amended U.S. Individual Income Tax Return, to correct your previously filed income tax return.
The form 1040X must be filed on a paper form and mailed and cannot be e-filed.
Disabled veterans should include all documents from the Veterans Administration and the Defense Finance and Accounting Services, explaining the changes, awards, proper tax treatment, and calculations.
An amended tax form only needs to be filed for the year of the V.A. reassessment of disability percentage, including any affected retroactive year, or the year that the Combat-Related Special Compensation is initially granted or adjusted, which may also include affected retroactive years.
Be sure you seek assistance from a tax professional before deciding that you need to file an amended tax form.
For more information, visit our Website at IRS.gov and type "Disabled Veterans" in the search box.