military disabled

[Girard Van De Lay]

I had a man come in yesterday said he is 100% disabled from the military. This has been the fact from 1978 and he stated that he has not filed a tax return since 1978. Now this year he recieved a 1099R from the military with a dist. code of 7.

Is there any way to see if this could of been miscoded? I am at a loss so any help would be great.

[ChEAr$]

retired military pay

If he is indeed 100% disabled, and therefore paid by the Veterans administration then he
should not have received a 1099R from retired pay operations. Something does not seem
right.

To find out, have him in office and visit this web page: https://mypay.dfas.mil/mypay.aspx

There are phone numbers there to call to seek assistance.

COULD be, that this 1099R has a small amount, say less than 100%, and the bulk is
from VA, in which case he is not 100% and never has been.

[DaveO]

Does he recieve Military Disability Pay

Based on % of disability not rank or length of service? This is not reported or taxed and does not figure into taxable SS calculation. Could he now be eligible for regular retirement pay?

[Tigger]

Disability Retired Pay

If the individual is 100% disabled and receiving VA compensation, Congress now allows the veteran also to receive his retirement pay at the same time. This was approved last year. I am also in this situation.

[ChEAr$]

But of course!

If the individual is 100% disabled and receiving VA compensation, Congress now allows the veteran also to receive his retirement pay at the same time. This was approved last year. I am also in this situation.

Now I remember that. (I'm not in this situation since I retired from service with
no pay.)

Anyway, client of OP when claiming 100% disability forgot to mention that his total
escalated because of new law.

[LCP]

Similar problem with a new client. I don't have all of the available information in front of me yet, but.......... client says he is 80% disabled and didn't have any taxable income or problems until 2003.

That year he started receiving a 1099R.

Any clues?

[Girard Van De Lay]

Never found out

I never found the answer that could be of any use to me and the client was of no help. His 1099 is still sitting here waiting to be done so I am at a loss. Let me know if you find anything out.

Girard

[S T]

I have a few

A few of my retired military have been filing in additional disability benefits, and those take a while to become approved and then relayed to the DFAS retirement.

So if they have been receiving DFAS retirement, it might not always reflect the new VA disability award. The client should have received the award from VA and then if it is not reflected on DFAS, you can take the exclusion for the new VA award.

I have had tax years overlap and retro VA benefits for part of this. You will have to obtain the statements from the t/p.

Once all is approved and in the cycle, the DFAS reports the correct amount on the retirement and you don't have to deal with again, unless there is a new disability claim filed.

Sandy

[LCP]

Sandy: I'm sure there was alot of good info in your post but I couldn't follow it since I don't have any prior experience with military disabilities.

Would it be too much trouble to hit me over the head with something simpler?

TIA !!!!!!!!

[George Boutwell]

Did he tell you his income increased, also?

There indeed was a change in the law a few years ago, allowing some military retirees to collect pensions as well as VA benefits. Under prior law, the taxable pension was reduced (often to nothing) by the nontaxable VA payment. Now, certain retirees can collect both. VA remains nontaxable, but the pension is taxed.

[S T]

Two Statements

Sorry, if my post sounded confusing. It is usually only in the year that there is a new VA disability award.

T/P would have a pay advice from DFAS, and if t/p was granted additional disability through the VA, he will have a statement of the new VA benefit for the new amount with some explanation.

It takes sever pay cycles from DFAS to reflect the change and reduce his military amount by the new VA amount, but at some point DFAS will send the T/P a new pay advice reflecting the non taxable portion VA benefit.

You will need both pay advices to determine if you can take an exclusion for any part of the VA disability.

Sandy

[LCP]

I just got copies of two letters from the Dept of Veterans Affairs dated 2/1/06.

One says he "receives a monthly benefit of 20% as compensation for service-connected disability"

The other says he is "entitled to receive TDRL disability payments from the Army in the amount of $940 per month"

That would total $11,280 ..... he got a 1099R fo $11,676. The benefit may have increased later in the year.

[LCP]

I have a bit more information now in addition to the letters referred to above (which I'm still not sure how to interpret).......

Taxpayer has always received a 1099R, Thru 2002 he attached a notice stating that the distribution was non-taxable disability along with a Form DD214. Apparently that worked.

In 2003 he did the same thing but the IRS assesed tax on it. Unfortunately I don't have any further info on how they (unsuccesfully) tried to resove that.

[LCP]

I have a little more info now to help solve the puzzle. Thanks for the help so far.

The 1099 with code 7 is issued by "Defense Finance and Accounting Service; US Military Retirement Pay".

The two letters referred to above were issue by Department of Veterans Affairs. The taxpayer explained to me that the one referring to a 20% disability would be applicable if he opted to receive VA benefits instead of the "Army" benefit he receives now.

Does that make sense?