Thought we might have some on the board who would need this info.
The above named legislation was signed by Obummer in December of 2016. It basically tells the DOD to notify all combat injured vets who received combat injury related payments from the DOD, the amount of income tax improperly withheld on those checks.
The checks were issued with income tax withholding beginning in January 1991. Those payments are tax-free under IRC section 104(a)(4), and should have had zero tax withholding. The problem is that for many the statute of limitations had expired, and they could not seek a refund of the withheld tax.
The DOD was supposed to identify the vets who had the improperly withheld tax, of the amount and that they could recover the tax. The law removes the statute of limitations, and allows refunds going back to 1991. An amended return(s) must be filed by the vet within one year of being notified by the DOD.
Its a short window, so if you were affected you need to take care of it immediately.
There are two options to get your money back:
1. File a 1040X for each affected year showing actual disability payments. Some vets received one payment in a lump sum, so they will only need to file one amended return.
2. IRS Simplified method - Claim a standard refund amount based on the calendar year in which the payment was received.
If you didn't get a letter from the DOD, you have to prove your payment and amount withheld; and also provide documentation showing the reason you received the payment. These two items must be provided with your 1040X.
If you don't have the required docs, contact DFAS.
The above named legislation was signed by Obummer in December of 2016. It basically tells the DOD to notify all combat injured vets who received combat injury related payments from the DOD, the amount of income tax improperly withheld on those checks.
The checks were issued with income tax withholding beginning in January 1991. Those payments are tax-free under IRC section 104(a)(4), and should have had zero tax withholding. The problem is that for many the statute of limitations had expired, and they could not seek a refund of the withheld tax.
The DOD was supposed to identify the vets who had the improperly withheld tax, of the amount and that they could recover the tax. The law removes the statute of limitations, and allows refunds going back to 1991. An amended return(s) must be filed by the vet within one year of being notified by the DOD.
Its a short window, so if you were affected you need to take care of it immediately.
There are two options to get your money back:
1. File a 1040X for each affected year showing actual disability payments. Some vets received one payment in a lump sum, so they will only need to file one amended return.
2. IRS Simplified method - Claim a standard refund amount based on the calendar year in which the payment was received.
If you didn't get a letter from the DOD, you have to prove your payment and amount withheld; and also provide documentation showing the reason you received the payment. These two items must be provided with your 1040X.
If you don't have the required docs, contact DFAS.
