Yet Another Severance and Taxes Question

[shawn488]

I have read through the forum post for hours and have found several different answers to my question. So in an effort to be as informed as possible, I'm going to ask again:

I am going through the IDES process and will be getting severance pay. On my PEB memo I have two unfitting conditions. Both have the following V codes: V1-NO, V3-NO, V4-YES. My questions are:

1. Will the VA recoup the severance back from my monthly check?
2. Will I be taxed on the severance?

Now from what I have read, due to the V4 code I will not have the severance recouped. I also read that I would be taxed initially but since the VA is going to award me a rating for the same condition, I will be able to get a refund of this money. I am looking forward to hearing from someone more informed that I am on the issue.

 

[gsfowler]

More than likely no tax or recoupment.

The V4-YES finding would make the members severance pay not offset by VA compensation and would make it tax-free.

 

[shawn488]

Would it initially be taxed and I have to apply for a refund?

 

[gsfowler]

Would it initially be taxed and I have to apply for a refund?

I do not think so, but if it does get taxed in error, you can request an refund. V4 means that the injury incurred in a tax-free combat zone, so it should not be taxable.