As a military veteran, you must also file taxes. But you can take advantage of several benefits the government has made available. Watch this video to see what you may be eligible to receive.
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Hello, I’m Lisa Lewis from TurboTax, with important news for military veterans.
As a veteran of the military, you have the same obligation to file a return and pay taxes as other Americans do. But in appreciation of your service to the country, there are a number of benefits the federal government offers you that can ultimately save you money on your tax bill.
The first thing you should understand is that any pension you receive after retiring from the military is fully taxable and must be reported on your tax return.
However, if you suffer from a disability and receive disability payments instead, those payments are tax free and you don’t need to report them on your return. In some cases, the Department of Veterans Affairs may determine that you are disabled and unable to work even after you retire from military service and have been collecting your taxable pension.
If Veterans Affairs decides to issue a retroactive directive—meaning that it recognizes your disability as of a prior date rather than on the date it makes the determination—you may be able to amend your past returns and receive a refund for the taxes you’ve paid on your pension. This is because the IRS recognizes that for certain periods you were receiving a taxable pension, you should have been receiving tax-free disability payments. As a way to correct the situation, you can eliminate the pension payments you’ve reported on past returns—but only up to the amount of disability payments you would have been eligible for in those years. You can amend your tax returns by filing a 1040X form for each year you want a refund, but they can only cover the tax years that don’t begin more than five years from the date Veterans Affairs makes its determination.
You may receive other benefits from the Department of Veterans Affairs that are not taxable to you or your family members who receive payments as well. There are many types of payments you can exclude from tax, such as allowances for educational training, the proceeds and dividends of a veterans’ insurance program and grants you receive to make your home more wheelchair accessible.
Did you know TurboTax also offers a free version of our product to members of the military who meet certain income requirements? Visit www.taxfreedom.com to see if you qualify.