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Peter Griesch
Peter Griesch,
Category: Military Law
Satisfied Customers: 324
Experience:  Tax Counsel at AIG, Inc.
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I was medically separated in July 2015. I received a

Customer Question

I was medically separated in July 2015. I received a severance check that was taxed because I didn't have a VA rating yet. I got my rating in ***** ***** but was not informed that I had to submit that to DFAS. I received my W2 and realized that it showed my severance as regular income. i contacted DFAS and they said to contact the IRS. I did that and they said DFAS would have to correct the W2 but DFAS said it was on the IRS. I know y taxes will eventually be returned to me for the severance pay but how can i expedite this process?
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Submitted: 10 months ago.
Category: Military Law
Expert:  Peter Griesch replied 10 months ago.

Thank you for your inquiry.

DFAS needs to issue you a corrected W-2. In theory, you could file your tax return using the current W-2 and separate out the portion of exempt income; however, getting a refund would be much easier with a corrected W-2.

If an employer issues an incorrect W-2 to an employee, the employer is legally required to issue a corrected W-2 to the employee. In that sense, the IRS is correct.

I would explain this to DFAS, and if they refuse, I'd ask to elevate to management. If after you've exhausted this process, and DFAS has refused, document so by certified letter to DFAS, keep in your records, and attach a copy, along with your rating to your return requesting a refund.

Though a W-2 is wrong, you have proof of your exempt rating, which should suffice for proof in your refund.

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