Tax Refund for disability severance pay
- Thread starter Jason Perry
- Start date
https://www.hrc.army.mil/site/Active/tagd/retire/newsletters/DSP-SOP.pdf. Scroll to the last page. It's a PDF document but it gives you the reg numbers and content. Also DFAS has the same information under this link Submit a Claim. Hope that answers your question.
David Goodman
PEB Forum Regular Member
Very helpful. Thanks!
Has anyone who received severance pay ever wondered how DFAS got to the number? I recently discovered that in 2005 (when I receved severance) the formula was 2 x base pay x years of service up to 12 years. I also discovered that I was only credited for 9.9 years after serving 9.9 years on active duty and 5.5 (good years) in the reserves. I was discharged with 10% and severance after being called up to active duty and being on active duty for 2 1/2 years.
Does anyone know whether I should be credited for my reserve time? If so, how do I get it corrected? I am before the PDBR ..but just in case...
Please help.
Does anyone know whether I should be credited for my reserve time? If so, how do I get it corrected? I am before the PDBR ..but just in case...
Please help.
David Goodman
PEB Forum Regular Member
I have another question that I hope you guys can help with:
In regard to being exempt from taxes, you have to fall into at least 1 of 3 categories. For the 3rd:
3. The member has official notification from the VA approving entitlement to disability compensation for the same illness or injury that caused the entitlement to disability severance pay.
What if the VA rating given is 0%? This is probably going to happen to me because my only unfitting condition being considered at the PEB is Meralgia Paresthetica (numbness of the external cutaneous nerve of the thigh). The VA doc wrote that I had this condition and characterized it as "Neuritis" which carries a 0% rating. The key here I believe is a correct interpretation of this phrase: approving entitlement to disability compensation - what does this actual mean in terms of ratings.
So all things being equal, if I'm separated for the condition and the PEB rates at 0% (per VASRD) and the VA also rates at 0%, would I be able to claim tax exclusion according to item #3?
Thanks.
In regard to being exempt from taxes, you have to fall into at least 1 of 3 categories. For the 3rd:
3. The member has official notification from the VA approving entitlement to disability compensation for the same illness or injury that caused the entitlement to disability severance pay.
What if the VA rating given is 0%? This is probably going to happen to me because my only unfitting condition being considered at the PEB is Meralgia Paresthetica (numbness of the external cutaneous nerve of the thigh). The VA doc wrote that I had this condition and characterized it as "Neuritis" which carries a 0% rating. The key here I believe is a correct interpretation of this phrase: approving entitlement to disability compensation - what does this actual mean in terms of ratings.
So all things being equal, if I'm separated for the condition and the PEB rates at 0% (per VASRD) and the VA also rates at 0%, would I be able to claim tax exclusion according to item #3?
Thanks.
Ok now i am completely confused. I am going through the PEB Process and i was under the impression that the severance was 2 x basepay x years of service - 28% (for Taxes) Also what is the part of this thread that is saying you have to pay back your entire severance? I am completely confused now. But still hoping i get over 30% which i think is reasonable. But i have a question. If i am found over 30% from the Navy but found 70-80% by the VA what will i recieve? Will i still get the retired ID card and the privelages? Someone please help.
I have another question that I hope you guys can help with:
In regard to being exempt from taxes, you have to fall into at least 1 of 3 categories. For the 3rd:
3. The member has official notification from the VA approving entitlement to disability compensation for the same illness or injury that caused the entitlement to disability severance pay.
What if the VA rating given is 0%? This is probably going to happen to me because my only unfitting condition being considered at the PEB is Meralgia Paresthetica (numbness of the external cutaneous nerve of the thigh). The VA doc wrote that I had this condition and characterized it as "Neuritis" which carries a 0% rating. The key here I believe is a correct interpretation of this phrase: approving entitlement to disability compensation - what does this actual mean in terms of ratings.
So all things being equal, if I'm separated for the condition and the PEB rates at 0% (per VASRD) and the VA also rates at 0%, would I be able to claim tax exclusion according to item #3?
Thanks.
0% is a rating,albeit not compensable. But still a rating.
Ccarro63
PEB Forum Regular Member
I could use a little help.
I'm thinking this is an IRS error, but if anyone knows anything on this I'd really appreciate any advice. I've been going through this process since being medically discharged in 2011. It took forever and a day to get a corrected W2 from DFAS. I was finally able to amend my tax return and after 6 months I got a letter saying my account had been adjusted as requested....I'd finally be getting my refund in 4 to 6 weeks! I was SO happy! This 2 nightmare would be over and I'd have MUCH needed money to stay afloat. NOPE. Not 3 days later I received another letter saying they were unable to process my claim. My heart fell out of my chest. The reason was because they said "it appears I am commingling provisions of the St Clair ruling with those of the Strickland decision." They'd like me to "clarify my claim. I called the IRS for the billionth time to do just that but the lady wouldn't give me any way to "clarify my claim."
Now, I'm not familiar enough with the Strickland decision, but doesn't it pertain to retiree's? I was medically discharged with a severance and then after my VA claim finished I was rated at 100% the next tax year...making the severance non-taxable and forcing me to amend the prior years tax return. I'm paying back the severance each month that I've had to pay tax on.
They want me to clarify my claim but I don't know what to do. Anyone have any advice on this....I'm lost.
-Thanks
I'm thinking this is an IRS error, but if anyone knows anything on this I'd really appreciate any advice. I've been going through this process since being medically discharged in 2011. It took forever and a day to get a corrected W2 from DFAS. I was finally able to amend my tax return and after 6 months I got a letter saying my account had been adjusted as requested....I'd finally be getting my refund in 4 to 6 weeks! I was SO happy! This 2 nightmare would be over and I'd have MUCH needed money to stay afloat. NOPE. Not 3 days later I received another letter saying they were unable to process my claim. My heart fell out of my chest. The reason was because they said "it appears I am commingling provisions of the St Clair ruling with those of the Strickland decision." They'd like me to "clarify my claim. I called the IRS for the billionth time to do just that but the lady wouldn't give me any way to "clarify my claim."
Now, I'm not familiar enough with the Strickland decision, but doesn't it pertain to retiree's? I was medically discharged with a severance and then after my VA claim finished I was rated at 100% the next tax year...making the severance non-taxable and forcing me to amend the prior years tax return. I'm paying back the severance each month that I've had to pay tax on.
They want me to clarify my claim but I don't know what to do. Anyone have any advice on this....I'm lost.
-Thanks
Ccarro63
PEB Forum Regular Member
Just following up on my previous post here for anyone that might need future assistance. The IRS had actually closed my claim and never even provided a chance for me to clarify anything. I ended up calling the IRS and requesting the IRS tax payer advocate. The tax payer advocate worked for a few weeks at reopening my claim and sending my claim to an IRS appeals officer.
For the entire rundown of my situation (that has finally started to come to an end) see this page: http://www.pebforum.com/site/threads/the-irs-disallowed-my-severance-pay-recoupment.16728/page-2
For the entire rundown of my situation (that has finally started to come to an end) see this page: http://www.pebforum.com/site/threads/the-irs-disallowed-my-severance-pay-recoupment.16728/page-2
Seems like it has been a while since this forum has been updated. I have tried calling the numbers listed in the document posted in the beginning, and they have all been disconnected. I am currently trying to recover my taxes from my Army disability severance. After some digging around and calling the VA several times, I found the following number to call for DFAS Separation and Reenlistment:
317-212-5950
Good luck getting ahold of them though, the person rarely answers the phone, and if you are lucky enough to get through, it is very hard to understand him/her (?) over the phone. The one time I did get through, the person gave me the following number to fax all relevant documents to:
317-275-0248
Good luck to anyone reading this. I'll try to post if I have any success with this.
-Dave
317-212-5950
Good luck getting ahold of them though, the person rarely answers the phone, and if you are lucky enough to get through, it is very hard to understand him/her (?) over the phone. The one time I did get through, the person gave me the following number to fax all relevant documents to:
317-275-0248
Good luck to anyone reading this. I'll try to post if I have any success with this.
-Dave
@david.emerson25 did you recently go through this process? if so how did it take. was there a way to check the status because i have a hard time trying to contact them by phone.
Hoping someone can help me!
I filed all the supporting documentation along with my tax return for tax year 2016.
I received $23,820.00 from my Disability Severence Pay, and that was the amount I received AFTER my $7,146.00 was taken out for taxes.
The IRS is now requesting that I fill out a 1040X and saying I should have received a form 1099.
I'm not sure what else I need to do at this point as I've provided all necessary documented information.
I filed all the supporting documentation along with my tax return for tax year 2016.
I received $23,820.00 from my Disability Severence Pay, and that was the amount I received AFTER my $7,146.00 was taken out for taxes.
The IRS is now requesting that I fill out a 1040X and saying I should have received a form 1099.
I'm not sure what else I need to do at this point as I've provided all necessary documented information.