[Strange Va Letter About Severance Pay Recoupment]

Sorry, and thank you.

Maverick

[Strange Va Letter About Severance Pay Recoupment]

So this is what I took away from that link......

(3) Severance pay. Where the disability or disabilities found to be service-connected are the same as those upon which disability severance pay is granted, or where entitlement to disability compensation was established on or after September 15, 1981, an award of compensation will be made subject to recoupment of the disability severance pay. Prior to the initial determination of the degree of disability recoupment will be at the full monthly compensation rate payable for the disability or disabilities for which severance pay was granted. Following initial determination of the degree of disability recoupment shall not be at a monthly rate in excess of the monthly compensation payable for that degree of disability. For this purpose the term “initial determination of the degree of disability” means the first regular schedular compensable rating in accordance with the provisions of Subpart B, Part 4 of this chapter and does not mean a rating based in whole or in part on a need for hospitalization or a period of convalescence. Where entitlement to disability compensation was established prior to September 15, 1981, compensation payable for service-connected disability other than the disability for which disability severance pay was granted will not be reduced for the purpose of recouping disability severance pay. Where entitlement to disability compensation was established on or after September 15, 1981, a veteran may receive disability compensation for disability incurred or aggravated by service prior to the date of receipt of the severance pay, but VA must recoup from that disability compensation an amount equal to the severance pay. Where payment of severance pay was made on or before September 30, 1996, VA will recoup from disability compensation an amount equal to the total amount of the severance pay. Where payment of severance pay was made after September 30, 1996, VA will recoup from disability compensation an amount equal to the total amount of the severance pay less the amount of Federal income tax withheld from such pay. For members of the Armed Forces who separated under Chapter 61 of title 10, United States Code, on or after January 28, 2008, no recoupment of severance pay will be made for disabilities incurred in line of duty in a combat zone or incurred during performance of duty in combat-related operations as designated by the Department of Defense. (Authority: 10 U.S.C. 1174(h)(2) and 1212(d))

I'm guessing through all the fancy talk this means they only take the percentage that was originally given for severance pay. I'm I reading that correctly then?

Thank you all for the help too!

Maverick

[Strange Va Letter About Severance Pay Recoupment]

It is the part of he has to pay back the severance pay he got for this medical at 20%. They can only take back at the % for at disablity he had from the service.

The law also covers the tax he gets back as when he gets his SC from the VA. there is a court case on this of getting the tax back. The lump sum should have still been the same as the per tax no matter what. the tax return has no play into this.

Is there a law or reg or something stating that they can only take back the % that I got my medical for from the military?

Mav

[Strange Va Letter About Severance Pay Recoupment]

This isn't about recoupment of the disability severance pay given to you, but rather recoupment of the income taxes that were withheld. If you have already amended your 2009 returns to recoup the taxes paid, you don't need read any further.

OK, you separated from service with disability severance pay in 2009; disability severance pay was a lump sum, with Federal (and state, if applicable) taxes withheld. As I recall, the standard withholding for FIT in this situation is 25%. This disability severance pay was reported on a W2.

When you filed your Federal and state tax returns for 2009, the disability severance pay should have been included in income. When you received the VA determination letter, according to Page 54 of the 2009 IRS Pub 17 http://www.irs.gov/p...r/p17--2009.pdf ,

If you receive a lump-sum disability sever-

ance payment and are later awarded VA disabil-

ity benefits, exclude 100% of the severance

benefit from your income. However, you must

include in your income any lump-sum readjust-

ment or other nondisability severance payment ·

you received on release from active duty, even if

you are later given a retroactive disability rating

by the VA.

you could have then amended your Federal (and state if applicable) tax returns for that year and received additional refunds (plus interest, likely).

Amending tax returns for 2009 is still "open" until April 15, 2013.

If you want to amend your Federal return, the instructions are at Form 1040-X http://www.irs.gov/p...-pdf/i1040x.pdf . IMPORTANT: YOU MUST USE THE TAX TABLES AND INSTRUCTIONS FOR 2009 http://www.irs.gov/p...i1040--2009.pdf AND NOT 2011 !!!! State tax returns are similar, but each state has somewhat different forms so it isn't possible to give suggestions without knowing the state in question.

You will need your need your 2009 tax return(s) to start the amendment. When you are finished, you have to attach a copy of your VA determination letter to each return. You will have to mail the returns in.

Amending returns can be done by the casual taxpayer. If you choose to have a commercial preparer do the returns, the going rate is in the $125-150 area.

Sorry for the delay in my responses. It seems to take them a while to show up here due to approval from the powers that be.

I did file it is income in 2009 and did recoup the taxes withheld at that time.

I can scan a copy of the letter if that would help???

Thank you,

Maverick

[Strange Va Letter About Severance Pay Recoupment]

They will only withhold the percentage of the condition that you received the severance pay. You can use the letter that came with your rating decision to amend your taxes for the year that you got the severance pay. It should have stated so in the letter. If it was seperation pay they would withhold it all. There is a waiver to withhold seperation pay at 50% if withholding it all would cause a hardship.

You say they will only withhold the percentage of the condition that I received the severance pay. That is 20%. I am now rated at 80% by the VA. Are you saying they can withhold the entire 80% to repay my original 20%? I can understand withholding all of the 20%, but not all of my current rating. Thank you!

Maverick

[Strange Va Letter About Severance Pay Recoupment]

I need a little advice from the crowd.

I am service rated at 80%, but received severance pay for degenerative joint disease at 20%. I have been repaying this pay at 20% of my monthy disability pay. Scheduled out to 2041 for repayment. This is to pay back the total of the severance pay minus Federal Tax withholding. But it now seems they are adding that into the mix now and wanting to repay the total??? I was under the impression this could not be done after Sep 30 1996(I was discharged in 2009).

I just received a letter stating....

"We are proposing to extend the withholding for your disability severance pay. Accordingly we propose to begin withholding all of your VA Compensation until your disability severance pay allowance is paid back."

Yet below that statement in the "revised" comenstion payment chart of the letter it still has me receiving my benefits, minus the adjusted 20% withholding(guessing for the cost of living raise we got). Still all the way until 2041.

It appears from the statement that they are going to withhold ALL of my disabilty compensation, but the revised compensation chart does not reflect this in any way.

My question is this.......can they withhold ALL of my disability compensation or is there a percent they can go up to? Like the 20% it is now? If they can and are going to do this(I intend to call them), how can I fight it? We have been receiving this disability for nearly 3 years now and have came to depend on it. Thank you for any help you can provide!

Mav

[Hello From Colorado!]

I could have swore I was a member here before, but just couldn't find my account. So I'll sign up again! Great site and great advice!

Mav