Time Running Out For Certain Tax Refunds Related to Lump Sum Veteran Disability Payment
The IRS announced that time may running out for a one-time tax relief offer to provide a tax refund related to a one-time lump sum disability severance payment. Veterans may have included these disability severance payments in taxable income for the year received. In 2016, Congress passed the Combat-Injured Veterans Tax Fairness Act to provide tax refund procedures for these veterans. Veterans eligible for a tax refund would have received the payment after January 17, 1991, and before January 1, 2017. The Department of Defense mailed a notice in July of 2018 explaining how to claim their tax refunds. While the normal rules for amending a return and claiming a tax refund are generally limited to three years, the Combat-Injured Veterans Tax Fairness Act allows for an additional one year window from the time of receipt of the notice from the Department of Defense to amend tax returns as far back as 1991 to claim the tax refund. The IRS has provided that the standard refund amounts are:
$1,750 for tax years 1991 – 2005
$2,400 for tax years 2006 – 2010
$3,200 for tax years 2011 – 2016
If you believe you are eligible for this tax refund, or know a veteran who may be eligible, confirm if they received that Defense Department letter. If you are unsure about your eligibility, contact the IRS or the Department of Veterans Affairs. Veterans who received a lump sum disability severance payment between the 1991 and 2017 time frame, but who did not receive a letter from the Department of Defense, may still be eligible. If you are unsure, contact Steiger Tax Law or review the link to the IRS notice below.