Is Army disability pay taxable?
State/Country relating to question: Mississippi
Going around in circles with the IRS.
Thanks for the chance to help. I am an attorney with over 12 years military law experience.No.Disability compensation (both from the VA and from the Army) is tax free. Army retired pay is taxed at you income rate
Retired Marine Corps Lawyer, Veterans Services Officer (VSO)
How do I get the Army to correct this on his wage form? The army classifed it on the wage form as a Retirement income but he has a letter from the Army stating he was being permanently retired on a 40% disability medical.
That is a mistake. If he was medically retired under Ch 61, that pay is not taxable. If they are taxing it, then it sounds like there is a mistake in the records and that his records to not reflect Ch 61 retirement To fix the mistake, you can file a request with the board of corrections of Army Records. You do this DD Form 149. You can find the form hereHere is the linkYou will want to file this with the Army board of records correction and they can correct the record to reflect a Ch 61 retirement. Once you do that, DFAS will stop taking taxes out.
I don't know if it is ch 61. The Army is not taking out any taxes our problem is with the IRS. We have sent them the letter stating he is medically disability retired but all the IRS sees is the word Retirement. They constantly overlook disability and are trying to make us pay back taxes.
How is DFAS reporting this? Are they sending a 1099?
THen that is your issue. If he is retired and drawing pay, it is either under Ch 61 (that is disability retirement) or under Ch 367 (retirement for length of service)It is one or the other. If he was retired for length of service, the pay is taxable. Period.If he was retired under Ch 61 the pay is not taxable.It is as simple as that.
DISCLAIMER: Answers from Experts on JustAnswer are not substitutes for the advice of an attorney. JustAnswer is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response to propose specific action or address specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances must be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on these general principles, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains.
The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).