VA Disability finally awarded... previous year tax question

[crsdsabers]

Hi folks,

I've been lax in reading and posting to the forum. I was medically retired in December 2011. While in the WTU, I filed for, and was awarded, SSDI. I filed a claim with the VA and learned Friday that my AB8 has been published and that I was awarded 90% (they didn't rate my tinnitus, which is documented in my Service Treatment record, and a couple more issues I'll go back to them for reconsideration) retroactive to my retirement date of 16 Dec 2011.

Because my retired pay is more than my VA award, and I've been receiving retired pay since December 2011, I won't be getting any back pay, which is fine. What I'd like to find out, and plan on calling IRS tomorrow, is if I can amend my 2012 tax return to reflect the tax exempt nature of the VA portion of my retired pay.

Any help? Sorry, I was never any good at asking short, simple, succinct questions.

 

[crsdsabers]

Retroactive VA determination. If you retire from the armed services based on years of service and are later given a retroactive service-connected disability rating by the VA, your retirement pay for the retroactive period is excluded from income up to the amount of VA disability benefits you would have been entitled to receive. You can claim a refund of any tax paid on the excludable amount (subject to the statute of limitations) by filing an amended return on Form 1040X for each previous year during the retroactive period. You must include with each Form 1040X a copy of the official VA Determination letter granting the retroactive benefit. The letter must show the amount withheld and the effective date of the benefit.
If you receive a lump-sum disability severance payment and are later awarded VA disability benefits, exclude 100% of the severance benefit from your income. However, you must include in your income any lump-sum readjustment or other nondisability severance payment you received on release from active duty, even if you are later given a retroactive disability rating by the VA.

Please disregard folks, I found my answer in IRS Publication 525. Apologies for the inconvenience.

 

[nwlivewire]

Retroactive VA determination. If you retire from the armed services based on years of service and are later given a retroactive service-connected disability rating by the VA, your retirement pay for the retroactive period is excluded from income up to the amount of VA disability benefits you would have been entitled to receive. You can claim a refund of any tax paid on the excludable amount (subject to the statute of limitations) by filing an amended return on Form 1040X for each previous year during the retroactive period. You must include with each Form 1040X a copy of the official VA Determination letter granting the retroactive benefit. The letter must show the amount withheld and the effective date of the benefit.
If you receive a lump-sum disability severance payment and are later awarded VA disability benefits, exclude 100% of the severance benefit from your income. However, you must include in your income any lump-sum readjustment or other nondisability severance payment you received on release from active duty, even if you are later given a retroactive disability rating by the VA.

Please disregard folks, I found my answer in IRS Publication 525. Apologies for the inconvenience.

The answer to your question and the posting of this informational answer is great!
Glad you found the answer and posted it for others to know about.

V/R,
nwlivewire