How Can Veterans Maximize Their Tax Advantages?

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Note: If you have recently had an increase in your disability rate or received a special battle-related bonus, you may be eligible for a tax refund. However, this can only be applied to the year the VA reassessed your disability level and you may need to submit an amended declaration.

Other money from the VA that is not taxed:

  • VA life insurance interest
  • Services provided as part of an aid program for people in need of care
  • Money paid to a survivor of a member of the Armed Forces who died after September 10, 2001
  • Payments under the remunerated occupational therapy program
  • Any bonus payment from a state, county, city, or location due to service in a combat zone

Missing money from stimulus checks can still be obtained through the Internal Revenue Service (IRS) Recovery Rebate Credit.

“The IRS used information from the Veterans Administration to issue the stimulus payments,” Greene-Lewis said. “So if you’ve received a partial payment based on the 2019 information, you may be eligible for additional payments in the form of a clawback.” Discount credit when you file your taxes for 2020. “

Even if you did not owe or pay any tax in 2020, you may still be eligible for the first and second incentive payments, as well as eligible dependent child payments. However, you would not be eligible for stimulus testing if your Adjusted Gross Income (AGI) is greater than:

  • $ 99,000 if your enrollment status was single or married and filed separately
  • $ 136,500 for the head of household
  • $ 198,000 if your enrollment status was married and filed together

However, because the second stimulus amount was below the first round limit, individuals who earned more than $ 87,000 and couples who collectively earned more than $ 174,000 would not have received a check for the second round.

If you are eligible, you will need to file the Standard Federal Tax Return Form 1040 or Tax Return 1040-SR for anyone aged 65 and over to receive your missing incentive money. This is the form of a tax credit that will either lower the amount of tax you owe or increase the amount of your refund.

State taxes

Fast facts on state taxes:

  • States typically only offer tax breaks to veterans who have been honorably discharged or discharged from active service in honorable circumstances.
  • Government benefits usually include some form of property tax exemption, depending on the value.
  • Benefits are often transferred to a spouse or surviving spouse of a discharged veteran.
  • Many states offer additional benefits for disabled veterans.
  • Each state’s revenue website describes the state benefits for veterans and how to get them.

Disabled veterans can qualify for property tax exemptions at the state level. These breaks, usually tied to a specific disability rating, can save a veteran thousands of dollars. View a list of all property tax exemptions by state and disability percentage. However, as tax laws change frequently, it is best to check the tax structure with your tax advisory center, state tax office, or tax advisor.

In some states, military retirement benefits may be untaxed or may contain other “special provisions”. Read this list of states that pay military pensions and do not tax them. If you are eligible, check the tax law with your local tax help center, state tax office, or tax advisor.

AARP Tax-Aide

The AARP Foundation’s Tax Aide Program, the largest free, voluntary tax assistance program in the United States, is ready to assist with state and federal returns. This year, Tax-Aide is offering various options to safely receive tax assistance during the pandemic.

“In this new environment of COVID, Tax-Aide has introduced a number of tax preparation support models that can help veterans, military personnel and others,” said Lynnette Lee-Villanueva, Vice President and National Director of the AARP Foundation Tax-Aide: “Von Secure personal service to virtual support and hybrid options – we’re here to help. “

The nationwide tax assistance program is aimed at people aged 50 and over or people with low to middle incomes. Tax-Aide is available to everyone free of charge. You don’t have to be an AARP member to use Tax-Aide’s knowledgeable volunteers, and there won’t be a sales pitch for other services.