220% Disabled

[Zee]

I've never heard of a 220% Veterans Disability, but VA disability isn't taxable.

http://www.irs.gov/publications/p525/ar02.html#d0e4346

My guess is your client is receiving a 100% disability, but the benefits are being stacked to equal 220% of the 100% disability amount (or, he's mistaken in his description). I provided the following link earlier to compensation amounts for various levels of disability and there is other information on how this might happen, for example adding dependents.

http://www.military.com/benefits/veteran-benefits/va-compensation-tables

[VT-EA]

Some source material

Wallace v CIR 128 T.C.11 at http://www.ustaxcourt.gov/InOpHistor...ace.TC.WPD.pdf caused the issuance of Rev. Rul. 2007-69 at http://www.irs.gov/pub/irs-drop/rr-07-69.pdf which states, “With respect to the taxation of veterans’ benefits, 38 U.S.C. A. § 5301(a)(1) provides that payments of benefits due or to become due under any law administered by the VA made to, or on account of, a beneficiary shall be exempt from taxation.”

The discussion section of Wallace is worth reading IMHO.

[Grumpy]

If it doesn't work with the first click - try again. Sometimes the first click returns an error.

[Grumpy]

does anyone have concrete information either way?

The following website may help you:

http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=d741c52f7d5b47cff93ecd0ec686fc0a&rgn=div5&view=text&node=38:1.0.1.1.5&idno=38#38:1.0.1.1.5.1.95.9

[erchess]

I don't have a cite but

I understand that some income from the VA is not taxable. He'll get a 1099 if any is taxable and maybe even if none is. That will clarify the issue of his VA. You might try talking with him and his VA counselor if any for an advance word. As for his other income not being taxable, that's utter nonsense Because of the way the tax code and regs are written, all income is taxable unless specifically exempt. You can find for example a cite that welfare benefits or the dividends from municipal bonds are not federally taxable. But there is no cite to show that a sufficiently disabled veteran is exempt from all Federal Income Tax because that sort of broad exemption of all of someone's income is not done in the US.

[RayT]

Seriously,

does anyone have concrete information either way?

[JohnH]

I have a client who fits that definition - at least I feel that way when I try to explain his tax return to him. The more I elaborate, the dumber I sound (to myself, anyhow)

[Byron]

Must be that new math

120% mentally disabled would mean your IQ would go down if you stood next to him.

[ChEAr$]

220%?

My client has been rated as 220% disabled by the VA. His military contacts have told him that he is exempt from Federal income tax on his disability income AND any other income he may earn. Is this possible? Where would I find a reference? Thanks for any comments.

Somehow that doesn't add up. Unless it's 100% physically disabled and 120% mentally
disabled.

Of course you already know the answer to the "any other income he may earn"
statement.
I still hear time to time from an elder client who avers that one is exempt from income
tax after age 70.

[RayT]

My client has been rated as 220% disabled by the VA. His military contacts have told him that he is exempt from Federal income tax on his disability income AND any other income he may earn. Is this possible? Where would I find a reference? Thanks for any comments.