VSI/SSB Recoupment Began Again in August 2010


PEB Forum Veteran
For old-timers such as myself who left active duty in the 1992-1993 time frame and accepted a voluntary separation incentive (VSI) or SSB, the DoD had stopped collecting it last year due to hardships on retiring individuals.

They've started recouping again but at a maximum rate of 40%. This means for those of us who had VSI/SSB, 40% of our retirement goes to pay back the amount given until it's paid off which in my case will take 10 years.

Those who don't get a military retirement, never have to pay it off--somehow that just doesn't seem right.


There was a proposal in Congress to reduce the payoff rate to 25%, not sure where that stands now. :mad:


PEB Forum Veteran
Tax information on recoupment of VSI/SSB per IRS Pub 525:

Repayment of $3,000 or less. If the amount you repaid was $3,000 or less, deduct it from your income in the year you repaid it. If you must deduct it as a miscellaneous itemized deduction, enter it on Schedule A (Form 1040), line 23.

Repayment over $3,000. If the amount you repaid was more than $3,000, you can deduct the repayment (as explained earlier under Type of deduction). However, you can choose instead to take a tax credit for the year of repayment if you included the income under a claim of right. This means that at the time you included the income, it appeared that you had an unrestricted right to it. If you qualify for this choice, figure your tax under both methods and compare the results. Use the method (deduction or credit) that results in less tax.
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