INCAP Recipients & SSI Payment & TAXES

Discussion in 'Other Benefits' started by OneFavor, Jan 20, 2011.

  1. OneFavor

    OneFavor PEB Forum Veteran

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    I was not sure where to put this. Please move if necessary:)

    Well, as you know I was injured in 2008, and was unable to work. I had been applying for INCAP pay but my Guard unit was a nightmare. I was approved for SSDI, and was also entitled to the INCAP. Needless to say, I was just paid in 2010 for the back pay to '08 and this has caused trouble. I now OWE the IRS because it put my husband and I in another tax bracket!:mad: I had been to social security and asked, and was told that I could get both as long as I had not worked. I even asked about having money withheld from the SSDI income and was told that it wasn't necessary because it is a type of disability pay. Oh were they wrong! So my advice would be to have them take out additional money for taxes for the time you are receiving INCAP so that you do not have any additional surprises.

    This is just a suggestion though, since it is disability pay, why can't incap pay be tax free or soldiers are given a tax break when they have those lump sum payments like that. Those monies had to get us out of debt, which was caused by a bum system, and we still end up paying in the end.:confused: Does anyone know of any tax breaks or any info that can assist with this new unexpected bill?
     
  2. trish

    trish PEB Forum Veteran

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    Have you tried calling legal assistance at your closest base? I would think since it is a tax question, that they would be able to help you? Just an idea...

     
  3. nwlivewire

    nwlivewire PEB Forum Veteran

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    I've been toldby my tax accountnt that I will have about a 20,000.00 tax bill to pay to the IRS because I rec'd AD pay and SSDI last year (in 2010, I rec'd a retro check for my SSDI - almost 2 yrs retro pay).

    I have no idea how I'm going to come up with this money, and at this point, I'm very disappointed with this whole system.

    You can work on Wall Street, make a million dollars a year, and only get 15% taxed. But you can become disabled from this war, fight for two years to get your SSDI, only for it to be taxed 30-50%!

    So not only will I be having to let go of my house as I will not be able to afford the payments after I discharge, I'm now going to owe the IRS the price of a brand new car on top of this!

    SSDI giveth, but the IRS taketh away.

    I have made contact with the VA and the social worker is aware of my impending situation. They do have housing vouchers, so I am staying in touch with them. I anticipate I will be temporarily homeless sometime this summer, and remain so for about six months while I negotiate with the IRS for a fair settlement on my tax debt.

    I never thought serving my country and becoming disabled as a result, would be this hard in the end and result in such hardships and losses. This boggles my mind...

    n/r,
    nwlivewire
     
  4. OneFavor

    OneFavor PEB Forum Veteran

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    nmlivewire,

    I am so sorry to hear about your current situation. We were blessed that our tax debt was not that much, but it was 6k. I guess my question would be do you have dependents? This is saved us tremendously, along with the fact that the tax laws for the state of Virginia allow you a 20k credit. You may want to research the laws for your state and see how much credit they allow for disability. You may also want to contact social services to see if they have housing funds and explain the situation. I know for my family they did pay a month of rent and my utility bills. Anything is worth a shot, if it will help keep you in your home. Just a heads up, you may receive a letter from social security because you did get the active duty pay. I had to provide them with my disability paperwork and info that it was INCAP pay and that I did not actually work.

    Trish,

    The INCAP pay is taxable and it is accounted for on a W2. It is just frustrating that even though they paid money, and I was not entitled to medical care or any other benefits. I thought it would have been better on a 1099, but that does not always work out either. I think it would just be nice that if the soldiers are disabled that they be allowed a tax break for the pay they receive. It should be tax free!
     
  5. badge4107

    badge4107 PEB Forum Veteran

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    A few facts. Painful, but facts. INCAP pay is State Workers Comp according to SSI and the regs on Incapacitation of Reserve Soldiers. If you reported this (the INCAP) to SSI, they are responsible for the overpayment, if the overpayment from SSI is the issue with your IRS debt. INCAP pay cannot be used to calculate pay under State unemployment insurance, it is however taxable income....for a disability incurred in The Line Of Duty. Disability payments (VA) are not taxable income. Anyone seeing the problem here?


    OneFavor and nwlivewire, I do not have the issues with the IRS and am not entered with SSI, but you can count me in your foxhole with this struggle. I will keep you updated.
     
  6. nwlivewire

    nwlivewire PEB Forum Veteran

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    Hello Folks:

    Thanks for the suggestions.

    I have no dependents, am 55 years old, widowed now.

    I have a small widows pension, will be receiving SSDI, and VA compensation (more than likely, my military will be offset as I do not have a 20 year letter).

    So I will drive on with what is left of my days and health - just disgusted at how this country is going these days.

    When the dust is all settled, and after I've paid my taxes, given up my home and settled my debts, I've half a mind to leave this country and live on my pensions elsewhere - somewhere where I can stretch out my dollars, and get good health care to boot. At least be somewhere where the weather is good, cost of living is doable, and so on. Why stay here when I can have a standard of living that is better elsewhere?

    I can still make myself useful and will be appreciated for my service to my new community as I have skills I can take with me wherever I go.

    This chapter of my life is just about finished. I'm ready to start writing the next one!

    v/r,
    nwlivewire
     
  7. Jack

    Jack PEB Forum Veteran

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    Hello...badge

    Your post...A few facts. Painful, but facts. INCAP pay is State Workers Comp according to SSI and the regs on Incapacitation of Reserve Soldiers. If you reported this (the INCAP) to SSI, they are responsible for the overpayment, if the overpayment from SSI is the issue with your IRS debt. INCAP pay cannot be used to calculate pay under State unemployment insurance, it is however taxable income....for a disability incurred in The Line Of Duty. Disability payments (VA) are not taxable income. Anyone seeing the problem here?


    Q: Would SSDI subtract their payment to u from INCAP payment you get?? Or neither will be offset but you will just expect to pay taxes on INCAP..THX
     

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