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Some Chatham Veterans with Disability Severance May Earn Tax Refund

Post Date:08/09/2018 11:18 AM

Chatham County veterans who received lump sum disability severance pay when discharged from service could qualify for federal income tax refunds, according to communications from the Veterans Administration (VA). Affected veterans should look for an letter from the Defense & Accounting Service (DFAS).

Chatham County Veteran Services Officer David Kennedy said that the announcement from the VA notes that veterans who had taken the lump sum severance payment had previously been required to report this as taxable income and had paid federal taxes on the payments.

The DFAS states that these veterans may be eligible for a refund if: 

  • Their injury or illness is the result of armed conflict, extra-hazardous service, conditions simulating war or instrumentality of war; or
  • They are currently receiving VA compensation or have been advised of an award of compensation for their disability or illness.

If veterans meet these qualifications, they should contact the Internal Revenue Service to file a form 1040X, Amended U.S. Individual Income Tax Return for the year in which the severance pay was paid.

Qualified veterans can file for the actual amount of the tax paid or a standard refund amount specified in the letter from DFAS:

  • $1,750 for tax years 1991-2005;
  • $2,400 for tax years 2006-2010;
  • $3,200 for tax years 2011-2016.

The DFAS letter to affected veterans will include complete instructions for how to file for a refund.

David Kennedy reminds all veterans in Chatham County that he is here to provide assistance with all types of veterans’ benefits. To ask questions or make appointments, contact David Kennedy at 919-545-8334, 919-357-4999 (mobile), or email him at david.kennedy@chathamnc.org. For more information on his office hours in Pittsboro and Siler City, CLICK HERE.

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