Tax Debt Help – “Disabled Veteran Payments Ruled Tax-Free”
IRS Newswire [irs-newswire@lists.qai.irs.gov]
Certain Payments to Disabled Veterans Ruled Tax-Free;
Some May Be Due Refunds
WASHINGTON — Payments under the Department of Veterans Affairs (VA) Compensated Work Therapy (CWT) program are no longer taxable and disabled veterans who paid tax on these benefits in the past three years can now claim refunds, the Internal Revenue Service said today.
Recipients of CWT payments will no longer receive a Form 1099 from the Department of Veterans Affairs. Disabled veterans who paid tax on these benefits in tax-years 2004, 2005 or 2006 can claim a refund by filing an amended return using IRS Form 1040X. According to the VA, more than 19,000 veterans received CWT in Fiscal Year 2007.
The IRS agreed with a U.S. Tax Court decision issued earlier this year, which held that CWT payments are tax-free veterans’ benefits. In so doing, the agency reversed a 1965 ruling which held that these payments were taxable and required the VA to issue 1099 forms to payment recipients.
According to the VA, the CWT program provides assistance to veterans unable to work and support themselves. Under the program, the VA contracts with private industry and the public sector for work by veterans, who learn new job skills, re-learn successful work habits and regain a sense of self-esteem and self-worth.
Related Item: Revenue Ruling 2007-69
My StumbleUpon Page
"The Baby Boomer Generation" 
JONATHAN GILBERT said,
December 19, 2007 at 12:01 am
I had a severe trauna to my head while in the service, I really didn’t think I would see 30 but at 43 I’m still here, all I ever wanted to do was to serve my country and then see it while driving an 18 wheeler, but my injury has stopped me, and if that is not enough the IRS wants a bunch of money, and money never even came through my mind.All I did is work/work/work!!! Money never mattered as long as I had fuel for my rig and food to survive. I never really knew how much I made or where I made it. So now I’m lost. I have no idea what to do or where to begin to look for help with this matter of me owing you, the IRS. Could someone PLEASE direct me in the right direction? I’m totally, completely, and absolutely lost.
Sincerely,
Jonathan D. Gilbert
Jim Buttonow said,
January 4, 2008 at 2:15 am
Mr. Gilbert:
I understand your frustration. There are many options. Please contact Corey Cooley at my firm and he will give you some honest answers on what your options are…he can be reached at 336-369-5200- just ask for Corey- or you can e-mail him at ccooley@effectur.com.
Thanks. And I hope I can help or point you in the right direction.
You can see some of the options at my web site http://www.irsmind.com
Thanks,
Jim
Margaret Lesh said,
February 12, 2008 at 7:10 pm
I have been going round and round trying to find out some correct info about military disablity and taxes. My husband was MEDICALLY RETIRED from the USAF. He was medically boarded and found to be 60% disabled by the USAF. He had 20 year 11 months and 15 days in as active duty. He has been rated as 70% disabled from the VA and receives payment from the VA (which we know is non-taxable). A couple different people, including someone from the VA has stated that 70% of any of his income should be considered non-taxable. This evidentally is supposed to include his military pension that he receives due to his medical retirement. Can anyone help with this issue. I’m very confused and after being on hold with the IRS for over 30 minutes and several hours trying to find info on the internet…I’m about over the whole mess. I appreciate any info that you can offer.
Thanks,
Margaret
babyboomer11852 said,
February 13, 2008 at 9:10 pm
According to Pub 17 from the IRS; Disability compensation and pension payments for disabilities paid either to veterans or their families are not taxable. You may also be entitled to an additional tax credit if your husband is considered totally and permanently disabled when he retired.
Your husband’s disability and retirement are due to a service-connected disability and are therefore not included in your income for taxation and don’t let anyone tell you otherwise.
S. Raines, Sr. Financial Advisor/Tax Preparer