Tax opportunities provided below create many opportunities for our Veterans to save!
Earned Income Tax Credit
Many Veterans are eligible for various tax credits including the Earned Income Tax Credit, a refundable federal income tax credit for low- to moderate-income workers and their families. Roughly two million Veterans and military households receive the EITC, the refundable component of the Child Tax Credit or both, according to Center on Budget and Policy Priorities. The credits provide a tax break for eligible service members, allowing them to keep more of what they’ve earned and build a financial cushion for unexpected emergencies.
Special Tax Considerations
Veterans may be eligible to claim a federal tax refund based on:
• The combat-disabled Veteran applying for, and being granted, Combat-Related Special Compensation, after an award for Concurrent Retirement and Disability.
• Special tax considerations for disabled Veterans occasionally result in a need for amended returns.
Combat-injured Veterans Tax Fairness Act of 2016
The combat-injured Veterans Tax Fairness Act of 2016 went into effect in 2017. Under this federal law, Veterans who suffer combat-related injuries and are separated from the military are not to be taxed on the one-time lump-sum disability severance payment they receive from the Department of Defense. This law instructs DoD to identify Veterans who were taxed in order for them to file an amended return to receive their refund. Go to Combat-Injured Veterans Tax Fairness Act Claim Information for more details.
VA Disability Benefits
Disability benefits received from the VA should not be included in your gross income. Some of the payments which are considered disability benefits include:
• Grants for motor vehicles for Veterans who lost their sight or the use of their limbs, or
• Benefits under a dependent-care assistance program.
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