Tag Archives: taxes

Veterans Who Received Disability Severance Owed Refunds

USAgencies Credit Union is the only Oregon credit union open to all Oregon Veterans, and we want to ensure all eligible veterans receive this important information regarding available tax refunds brought to you by our friends at the U. S. Department of Veterans Affairs.

 

The Internal Revenue Service is advising certain Veterans who received disability severance payments after Jan. 17, 1991, and included that payment as income, that they should file Form 1040X, Amended U.S. Individual Income Tax Return, to claim a credit or refund of the over payment attributable to the disability severance payment.

This is a result of the Combat-Injured Veterans Tax Fairness Act passed in 2016.

Most Veterans who received a one-time lump-sum disability severance payment when they separated from their military service will receive a letter from the Department of Defense with information explaining how to claim tax refunds they are entitled to; the letters include an explanation of a simplified method for making the claim. The IRS has worked closely with the DoD to produce these letters, explaining how Veterans should claim the related tax refunds.

Statute of Limitations

The amount of time for claiming these tax refunds is limited. However, the law grants Veterans an alternative timeframe – one year from the date of the letter from DoD. Veterans making these claims have the normal limitations period for claiming a refund or one year from the date of their letter from the DoD, whichever expires later. As taxpayers can usually only claim tax refunds within 3 years from the due date of the return, this alternative time frame is especially important since some of the claims may be for refunds of taxes paid as far back as 1991.

Amount to Claim

Veterans can submit a claim based on the actual amount of their disability severance payment by completing Form 1040X, carefully following the instructions. However, there is a simplified method. Veterans can choose instead to claim a standard refund amount based on the calendar year (an individual’s tax year) in which they received the severance payment. Write “Disability Severance Payment” on line 15 of Form 1040X and enter on lines 15 and 22 the standard refund amount listed below that applies:

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

Claiming the standard refund amount is the easiest way for Veterans to claim a refund, because they do not need to access the original tax return from the year of their lump-sum disability severance payment.

Special Instructions
All Veterans claiming refunds for over payments attributable to their lump-sum disability severance payments should write either “Veteran Disability Severance” or “St. Clair Claim” across the top of the front page of the Form 1040X that they file. Because all amended returns are filed on paper, Veterans should mail their completed Form 1040X, with a copy of the DoD letter, to:

Internal Revenue Service

333 W. Pershing Street, Stop 6503, P5

Kansas City, MO  64108

Veterans eligible for a refund who did not receive a letter from DoD may still file Form 1040X to claim a refund but must include both of the following to verify the disability severance payment:

  • A copy of documentation showing the exact amount of and reason for the disability severance payment, such as a letter from the Defense Finance and Accounting Services (DFAS) explaining the severance payment at the time of the payment or a Form DD-214, and
  • A copy of either the VA determination letter confirming the Veteran’s disability or a determination that the Veteran’s injury or sickness was either incurred as a direct result of armed conflict, while in extra-hazardous service, or in simulated war exercises, or was caused by an instrumentality of war.

Veterans who did not receive the DoD letter and who do not have the required documentation showing the exact amount of and reason for their disability severance payment will need to obtain the necessary proof by contacting the Defense Finance and Accounting Services (DFAS).


For additional information, or to read the original article head over to the U. S. Department of Veterans Affairs page HERE. Questions about USAgencies Credit Union? Contact us at 503.275.0300 Option 3 or stop in today!

Tax Identity Theft Awareness Week

From our friends at the Federal Trade Commission

Tax identity theft happens when someone uses your Social Security number to get a tax refund or a job. You might find out it has happened when you get a letter from the IRS saying more than one tax return was filed in your name, or IRS records show you have wages from an employer you don’t know.

Learn how to reduce the chance you’ll be a victim and find out what to do if you are during Tax Identity Theft Awareness Week, January 29-February 2, 2018. The FTC and its partners are hosting a series of free webinars and Twitter chats. Follow the links below for information about how to participate.

Here’s what’s on tap:

Monday, Jan. 29

  • 2 p.m. EST ― The FTC and the Identity Theft Resource Center co-host a webinar for consumers. Learn about tax-related identity theft and IRS imposter scams, their financial and emotional impact, how to protect yourself, and how to recover if you become a victim.

Tuesday, Jan. 30

  • 2:30 p.m. EST ― The FTC, AARP Fraud Watch Network, AARP Foundation Tax-Aide program, and the Treasury Inspector General for Tax Administration host a webinar on tax identity theft and IRS imposter scams. Learn how tax identity theft and IRS imposter scams occur, how to avoid them, recovery steps for victims, and about free resources for you and your community.

Wednesday, Jan. 31

  • 11 a.m. EST ― The FTC and the Department of Veterans Affairs co-host a Twitter chat for service members, veterans, and their families. Learn how to minimize your risk of tax identity theft, and what to do if it happens to you. Join the conversation at #VeteranIDTheft.
  • 1 p.m. EST ― The FTC, the Department of Veterans Affairs, and the Treasury Inspector General for Tax Administration discuss tax identity theft, IRS imposter scams, and how to lower your risk of becoming a victim. This is a closed webinar for Veterans Administration employees, contractors, and patients.

Thursday, Feb. 1

  • 1 p.m. EST ― The FTC and IRS offer a webinar for small businesses: Protecting Sensitive Business and Customer Data ― Practical Identity Safety Practices for Your Business. Learn about tax-related identity theft, imposter scams that target businesses, practical cybersecurity practices for small business, data breach response, and free resources for your business, employees and customers.
  • 3 p.m. EST ― The FTC and the Identity Theft Resource Center co-host a Twitter chat about protecting yourself against tax-related identity theft. Get to know the warning signs, how to reduce the chance of becoming a victim, and how to recover if it happens to you. Join the conversation at #IDTheftChat.

 

For information about identity theft in general, please visit ftc.gov/idtheft.

Cut Tax Time Stress with These Quick Tips

Key Tax-Preparation Tips to Cut Stress

Although it comes around every spring, tax season tends to inflict the same headaches year after year. To reduce your stress — and maximize your refund — it’ll help to stay organized and be aware of recent changes to the tax code.

For additional motivation to get on track, keep in mind that the average refund has been about $3,000 in recent years. Even if you don’t expect to get that much back, there are plenty of ways to put a refund to good use. But first, you’ll have to file your returns properly, taking advantage of any deductions you might qualify for. Here’s a look at where to get started.

Compiling the necessary information

For starters, you’ll need your W-2 form listing earnings and tax withholdings, which employers typically send out in January or early February. Be sure to have your Social Security number or taxpayer identification number available, as well as those numbers for any dependents you’ll claim. You’ll also need documentation of any income they may have had.

Affordable Care Act penalty

The 2010 Affordable Care Act ushered in one of the most significant tax law changes in recent years. It stipulates that if you didn’t have health insurance for more than three months in 2015 and didn’t qualify for an exemption, you may face a penalty.

For tax year 2015, taxpayers who lack adequate insurance may be penalized at either 2% of a portion of their income or $325 per adult and $167.50 per child, to a maximum of $975 per family — whichever is higher. Those fees are set to increase in upcoming years, which means it’s a good idea to get insured as soon as possible.

Tax deductions reduce taxable income

Deductions reduce the amount of your income that you have to pay taxes on. Sit down and figure out whether the standard deduction or itemized deductions will work best for you. The former is a set amount that reduces your taxable income depending on your filing status; the latter lets you list qualified expenses separately, such as mortgage interest and local property taxes. If your itemized deductions add up to more than your standard deduction amount, go with that.

So what kinds of expenses can you deduct? Contributions to eligible organizations and interest on education loans are among the more well-known deductions you can take. Others, such as medical and home office expenses, aren’t as widely used for various reasons. Make sure to look into which of your expenses you can use to reduce your taxable income, which will probably increase your refund. Bear in mind that income limits and expense thresholds may limit these deductions or eliminate them entirely.

If you qualify to contribute to a traditional individual retirement account, or IRA, you may be able to shield up to $5,500 of income from taxes — plus $1,000 more if you’re 50 or over — by putting it in an IRA. You have until April 15 to make deductible contributions for the previous year. Withdrawals are subject to income tax, however.

Also, if you’re in a same-sex marriage, stay alert for further changes in the rules governing your tax status and other financial issues.

The bottom line

Completing your tax returns won’t be much fun, but it’s the first step in claiming a refund. Once you’ve filed your returns, you should expect to get what you’re due within three weeks — or in less than half that time if you ask for the money to be directly deposited to a savings or checking account. Just remember to compile all the essential paperwork before getting started, keeping an eye out for tax credits and changes to the tax code.

 

 

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USACU does not provide tax consulting or advising services. For specific tax advice, please consult a certified tax consultant.