The Internal Revenue Service reminds you to veterans who received disability compensation payments after 1991 and included your payments as income, the time to claim your refunds is running out.

By MiamiDiario Newsroom

The veterans who still have not filed Form 1040X, Amended U.S. individual income tax return to claim a credit or refund of the overpayment attributable to the disability benefit payment, they must do so promptly.

"We appreciate the service and sacrifice of our nation's injured veterans and the IRS is pleased to help deliver refunds under this special provision.", said IRS Commissioner Chuck Rettig, “Time is running out this month for many people who qualify for this refund. “We urge veterans with combat injuries to take the time to review the provisions to determine if they are eligible.

The Combat Injured Veterans Tax Fairness Act of 2016 states that most veterans who received a lump-sum disability payment when they separated from military service are entitled to a refund if that payment was claimed as income. The payment must have been received after January 17, 1991, and before January 1, 2017. Eligible veterans should have received a letter from the Department of Defense in July 2018 explaining how to claim these tax refunds.

Some veterans have yet to act

The deadlines are approaching soon, as the time available to claim these tax refunds is limited:

  • One year from the date of the Department of Defense notice.
  • Three years after the due date for filing the original return for the year in which the disability compensation payment was made.
  • Two years after the tax was paid for the year in which the disability compensation payment was made.
  • Veterans claiming their refund have the normal limitation period for claiming a refund or one year from the date of their letter from the Department of Defense, whichever expires later. Since taxpayers can generally only claim tax refunds within three years from the due date of the return, this alternative time frame is especially important since some of the claims may be for tax refunds paid since 1991. While many veterans have claimed their refunds in the past year, many others have not.

Two options to claim the tax refund:

  • 1. File a claim based on the actual amount of your disability compensation payment.
  • 2. Elect to claim the standard reimbursement amount listed below for the year in which the disability compensation payment was made. Simply write “Disability Severance Payment” on Form 1040X, line 15, and enter the standard refund amount listed below on line 15, column B, and on line 22, leaving the remaining lines blank.

Veterans can file a claim based on the actual amount of their disability compensation payment by completing Form 1040X and carefully following the instructions. An original return is not required if information for that tax year is available. Veterans without the information required to complete Form 1040X, may request an online transcript 

Option 2, Claiming the standard refund amount is the easiest way for veterans to claim a refund because they don't need to access the original tax return or request information about the return from the IRS. May result in a higher or lower refund based on the actual amount of the statement. The amounts of a standard refund are:

$1,750 for tax years 1991 – 2005
$2,400 for tax years 2006 – 2010
$3,200 for tax years 2011 – 2016

Special instructions

Please carefully follow the instructions in the letter sent by the Department of Defense in July 2018.

  • Complete and file IRS Form 1040X, Amended US Individual Income Tax Return, for the tax year in which the disability award payment was made.
  • Write “Veteran Disability Severance” or “St. Clair Claim” at the top of the Form 1040X home page.
  • All amended returns are filed on paper, so veterans should mail their completed Form 1040X, with a copy of the Department of Defense letter, to:

Internal Revenue Service

333 W. Pershing Street, Stop 6503, P5

Kansas City, MO 64108

Eligible but never received a letter from the Department of Defense

Veterans who did not receive a letter from the Department of Defense and received disability compensation payment after January 17, 1991, which was reported as income tax, may still file a claim.

Veterans should visit the Defense Finance and Accounting Service (in English) or the Department of Veterans Affairs (in English) to obtain the documentation required to file your Form 1040X.

With information from press release

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