By Jim Kilgore (USAF Ret.)
Financial Advisor, 401Advisor, LLC
To my retired veteran friends and friends of service-connected veterans,
If you are retired and receiving above 20% disability rating from the VA you have a possible tax refund due to you.
In 2016 the Department of Treasury updated IRS Publication 525 (specifically page 18 center column) which explains how retired veterans with a VA rating above 20% can recoup money deducted from their retirement pay. You can either google the publication or go to the IRS website https://www.irs.gov/pub/irs-pdf/p525.pdf. I will add the main points below, here’s what you need to know:
-You should already know your disability pay should not be taxed.
-If you are retired and receive 20% or more in disability pay, your retirement pay should not have been taxed at the standard rate.
-As an example: A retired veteran with a 70% rating should only have 30% of their retirement pay taxed.
-A retired veteran with a 90% rating should only have 10% of their retirement pay taxed.
-You are entitled to recoup that overage according to IRS Publication 525.
-The amount of your refund depends on your individual rating and of course your gross retirement pay.
-The statute of limitations is three years. Accountants can only go back to tax years 2015, 2016, and 2017. If you wait intil filing your 2019 taxes, you could lose the ability to get a refund for 2015. You need to act now.
– Adjustments MUST be mailed in and not electronically filed.
-State refunds will be faster than federal.
-Veterans will also receive interest on the money from those tax years.
-Provide your accountant or me with copies of your previous tax years (2015, 2016 and 2017); and a copy of the letter stating your VA rating and a copy of your dd214. This can be found on eBenefits at https://www.ebenefits.va.gov/ebenefits/homepage. Once logged on go to Manage tab at the top of the page > Documents and Records > VA Letter > Benefit Verification.
-Our refund is sanctioned through the IRS under IRS Publication 525, specifically pages 17-19.
– For the tax year 2018, and each one going forward, we are required to add the letter verifying your rating and mail the return to the IRS. That’s right; every year going forward retired veterans should get a return.
-A question was asked in the benefits briefing if HR Block or other tax prep companies know about this. When I called the IRS I was told she is among very few accountants/preparers calling to inquire about this benefit for veterans.
-I’ve given this information to several Veterans but several tax preparers are telling the Veteran they don’t qualify. Please don’t believe them!!!! Again, the prerequisite is retired and above 20%.
I want to stress that I know this sounds too good to be true but it is. Don’t automatically think you don’t qualify, don’t allow preparers who are not versed in IRS Pub 525 to tell you that you don’t qualify and please don’t leave this money on the table.
If you would like me to help you file your amended tax returns with the IRS, I will be happy to work with you to do so.
If you are a friend or relative of a veteran, don’t assume they are aware of this. One tax preparer we work with, and is familiar with this benefit says he is regularly filing amended returns for thousands of dollars in refunds.
For more information or assistance contact Jim at 937.434.1790 or Jim@401Advisor.com
