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akqueen01

Severance Pay & Taxes

15 posts in this topic

My question is about severance pay and taxes paid on that severance pay. Recently, literally today, it has come to my attention that if the VA rates a Vet disability we can reclaim that tax money paid with our severance pay. Basically, in a nutshell, will all the money paid in taxes, for me 2009, be refunded or is there some kind of gauge to measure how much to expect in return? Say if you paid $6000 you get roughly 10% of that back or is all $6K refunded to you? I just don't want any thing to come back and bite me. You know?

I called the IRS; I've seen crazy stuff about you need to submit corrected W-2's from DFAS, final orders, submit DD-214, blah, blah, blah & blah. The only thing the IRS said I need to send them is a 1040X, VA determination letter with the award and effective start date of that award letter. As well as the amount of my severance pay that was taxed. I have all this information.

My last concern is the deadline is Apr. 15, 2013 for me. I have an appointment with H&R Block Thursday. I will more than likely submit this 1040X to the IRS on the 26th-same day. My question is, can the government sit on this paperwork until Apr 16, 2013 next year and send me a reply back telling me that my 3 years are up and I am no longer entitled to that recoupment of tax monies paid? I could seriously see the government doing something like that if it is possible. You know how they can be!!!

Does anyone know what's up or have personal experience in this area? I think I am being over paranoid but if you lived my life you would be the same way.

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The following is somewhat out of order to the way you posted, but I think it flows nicely ....

Does anyone know what's up Yes, I do. or have personal experience in this area? Yes, I do.

The only thing the IRS said I need to send them is a 1040X, VA determination letter with the award and effective start date of that award letter. As well as the amount of my severance pay that was taxed. That's correct. Pretty much what IRS Pub 17 Page 53 Column 1 Paragraph 2 http://www.irs.gov/p...s-pdf/p17.pdf says, as well as the instructions for Form 1040-X.

Basically, in a nutshell, will all the money paid in taxes, for me 2009, be refunded or is there some kind of gauge to measure how much to expect in return? Say if you paid $6000 you get roughly 10% of that back or is all $6K refunded to you? After you file the 1040X, the severance pay due to disability/retroactive VA disability compensation has now magically been "recharacterized" from taxable to non-taxable income. However, any other income from 2009 still remains taxable. Also, there are miscellaneous tax credits, whose amount might change one way or another, because of the now reduced income. It's difficult to say what the exact affect is, ie., the additional refund might be.

BTW, this is valid for DISABILITY SEVERANCE PAY ONLY.

Also, be advised that you will be paid interest on the additional refund from April 15, 2009 2010 (oops, my bad, edited 7/22/2012) to the date the 1040X is processed. Early in 2013, you will receive a Form 1099-INT from the Treasury and this interest will be taxable income on this year's return (to be filed by April 15, 2013.

My last concern is the deadline is Apr. 15, 2013 for me. I have an appointment with H&R Block Thursday. Unless Herbie did your 2009 return, bring in your file copy of your 2009 return; if HRB didn't do the return and you don't have a copy, they can order a tax transcript. Be advised that Herbie charges $100-150 for amended returns, paid before you get the return(s).

I will more than likely submit this 1040X to the IRS on the 26th-same day. Amended returns cannot be eFiled, they must be "paper filed", ie., mailed in. Processing is in the 8-12 week range. I'd suggest certified, return receipt requested.

My question is, can the government sit on this paperwork until Apr 16, 2013 next year and send me a reply back telling me that my 3 years are up and I am no longer entitled to that recoupment of tax monies paid? Sure ... also, don't forget the Maya calendar suppositions for December 21, 2012, the possibility of some dam breaking and you being washed away, or any other personal cataclysm.

Put a little tick note in your files. If you mail the 1040X on or about August 26, you should expect your refund check in the late October-late November-ish time frame. If you haven't heard anything by mid-December, you can contact the Taxpayer Advocate Service http://www.irs.gov/advocate/, or go back and ask Herbie to check (they'll just get your tax POA and contact the Advocacy Service anyway).

I could seriously see the government doing something like that if it is possible. I can't. Seriously.

You know how they can be!!! No, I don't know how they can be.

My question is about severance pay and taxes paid on that severance pay. Recently, literally today, it has come to my attention that if the VA rates a Vet disability we can reclaim that tax money paid with our severance pay. Basically, in a nutshell, will all the money paid in taxes, for me 2009, be refunded or is there some kind of gauge to measure how much to expect in return? Say if you paid $6000 you get roughly 10% of that back or is all $6K refunded to you? I just don't want any thing to come back and bite me. You know?

I called the IRS; I've seen crazy stuff about you need to submit corrected W-2's from DFAS, final orders, submit DD-214, blah, blah, blah & blah. The only thing the IRS said I need to send them is a 1040X, VA determination letter with the award and effective start date of that award letter. As well as the amount of my severance pay that was taxed. I have all this information.

My last concern is the deadline is Apr. 15, 2013 for me. I have an appointment with H&R Block Thursday. I will more than likely submit this 1040X to the IRS on the 26th-same day. My question is, can the government sit on this paperwork until Apr 16, 2013 next year and send me a reply back telling me that my 3 years are up and I am no longer entitled to that recoupment of tax monies paid? I could seriously see the government doing something like that if it is possible. You know how they can be!!!

Does anyone know what's up or have personal experience in this area? I think I am being over paranoid but if you lived my life you would be the same way.

Edited by jvretiredvet

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The following is somewhat out of order to the way you posted, but I think it flows nicely ....

Does anyone know what's up Yes, I do. or have personal experience in this area? Yes, I do.

The only thing the IRS said I need to send them is a 1040X, VA determination letter with the award and effective start date of that award letter. As well as the amount of my severance pay that was taxed. That's correct. Pretty much what IRS Pub 17 Page 53 Column 1 Paragraph 2 http://www.irs.gov/p...s-pdf/p17.pdf says, as well as the instructions for Form 1040-X.

Basically, in a nutshell, will all the money paid in taxes, for me 2009, be refunded or is there some kind of gauge to measure how much to expect in return? Say if you paid $6000 you get roughly 10% of that back or is all $6K refunded to you? After you file the 1040X, the severance pay due to disability/retroactive VA disability compensation has now magically been "recharacterized" from taxable to non-taxable income. However, any other income from 2009 still remains taxable. Also, there are miscellaneous tax credits, whose amount might change one way or another, because of the now reduced income. It's difficult to say what the exact affect is, ie., the additional refund might be.

BTW, this is valid for DISABILITY SEVERANCE PAY ONLY.

Also, be advised that you will be paid interest on the additional refund from April 15, 2009 to the date the 1040X is processed. Early in 2013, you will receive a Form 1099-INT from the Treasury and this interest will be taxable income on this year's return (to be filed by April 15, 2013.

My last concern is the deadline is Apr. 15, 2013 for me. I have an appointment with H&R Block Thursday. Unless Herbie did your 2009 return, bring in your file copy of your 2009 return; if HRB didn't do the return and you don't have a copy, they can order a tax transcript. Be advised that Herbie charges $100-150 for amended returns, paid before you get the return(s).

I will more than likely submit this 1040X to the IRS on the 26th-same day. Amended returns cannot be eFiled, they must be "paper filed", ie., mailed in. Processing is in the 8-12 week range. I'd suggest certified, return receipt requested.

My question is, can the government sit on this paperwork until Apr 16, 2013 next year and send me a reply back telling me that my 3 years are up and I am no longer entitled to that recoupment of tax monies paid? Sure ... also, don't forget the Maya calendar suppositions for December 21, 2012, the possibility of some dam breaking and you being washed away, or any other personal cataclysm.

Put a little tick note in your files. If you mail the 1040X on or about August 26, you should expect your refund check in the late October-late November-ish time frame. If you haven't heard anything by mid-December, you can contact the Taxpayer Advocate Service http://www.irs.gov/advocate/, or go back and ask Herbie to check (they'll just get your tax POA and contact the Advocacy Service anyway).

I could seriously see the government doing something like that if it is possible. I can't. Seriously.

You know how they can be!!! No, I don't know how they can be.

Thanks for your reply. It was very helpful. Not worried about the Mayan superstitions. The real Mayans don't even believe that. It was a great read and helped out tremendously. Thank you very much! Yes H&R Block did do my 2009 Tax Return. Shouldn't be a problem.

Edited by yosh1234

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Just nosy ... how did your appointment with Herbie go?

Thanks for your reply. It was very helpful. Not worried about the Mayan superstitions. The real Mayans don't even believe that. It was a great read and helped out tremendously. Thank you very much! Yes H&R Block did do my 2009 Tax Return. Shouldn't be a problem.

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Just a reiteration for those who receive a retroactive VA disability determination ... nothing new, but it always bears repeating http://www.irs.gov/I...ns-for-Veterans .

BTW, this link applies to disabled veterans who are retired military or those who separate with disability severance pay.

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