Completely Confused With Va's Decision (Crsc Vs Crdp)

[gadawg31]

Hello everyone,

I have been searching all morning for a topic related to the question I am going to ask and I am exhuasted. Here goes: I received my decision from VA yesterday and I am more confused now than ever. I have called VA and DFAS, but neither one can give me a definative answer, due to DFAS starting an audit worksheet. I was basically asking if and when I would recieve by backpay, since it has been a year since I officially retired. I was told that until DFAS completes there audit, I am only entitled to my monthly VA compensation payment. I was also told that if I am eligible for backpay, then it may be a prorated amount. What I am confused about is everyone keeps telling me that I will get basically my monthly VA amount for every month since I retired and that it is all non-taxible. With that said, the VA website states that CRDP is taxable and I may not be eligible for CRSC. Can anyone shed some light on this that has recently go throught the process? I just want to have an idea of what to expect. I am not looking for a dollar amount, just some info as to what I should be looking for and if I need to raise any flags. Thanks.

JD

[jvretiredvet]

Take what information suits you ...

With that said, the VA website states that CRDP is taxable That's correct because Concurrent Retirement and Disability Pay (CRDP) remains military retirement pay, ie, it is a return of some (or all) of your military retirement pay because certain prohibitions against concurrent receipt were removed in 2005.

and I may not be eligible for CRSC. Well, the VA does not make the decision whether a disability is eligible for Combat Related Special Compensation (CRSC) or not, your military service does.

FWIW, when a retired military person receives a VA disability rating of 50% or greater, the VA notifies DFAS and the CRDP process starts automatically. If you believe you qualify for CRSC, you have to apply for it. Again FWIW, CRSC is not additional money, it is money from your MilRetPay that is not subject to taxation because it is a result of a combat injury; for a little light reading, may I suggest Section 104 of the IRS Code? Finally FWIW, you can't receive both CRSC and CRDP for the same disability.

Hello everyone,

I have been searching all morning for a topic related to the question I am going to ask and I am exhuasted. Here goes: I received my decision from VA yesterday and I am more confused now than ever. I have called VA and DFAS, but neither one can give me a definative answer, due to DFAS starting an audit worksheet. I was basically asking if and when I would recieve by backpay, since it has been a year since I officially retired. I was told that until DFAS completes there audit, I am only entitled to my monthly VA compensation payment. I was also told that if I am eligible for backpay, then it may be a prorated amount. What I am confused about is everyone keeps telling me that I will get basically my monthly VA amount for every month since I retired and that it is all non-taxible. With that said, the VA website states that CRDP is taxable and I may not be eligible for CRSC. Can anyone shed some light on this that has recently go throught the process? I just want to have an idea of what to expect. I am not looking for a dollar amount, just some info as to what I should be looking for and if I need to raise any flags. Thanks.

JD

[gadawg31]

Thanks for the info; however I have one main concern with the website and your info. Everyone I have spoke with, gets their retirement pay and also a separate check for VA compensation. Several close friends that retired the same time as I, all receive their money the same way. With that said, I asked do they pay taxes and all the responses were no (only to their compensation check/they do pay taxes on their military retirement check). After reading the VA website about the 10yr plan to bring retired pay back to normal, your response makes sense. However; the whole tax issue has me concerned. Too many vets that I have spoken with all state their compensation is tax free and have not received a W-2 or 1099 or even filed. Not saying that makes it ok, but that is what confused me so much when I read and speak with people that state the opposite. I was finally able to speak with a close friend today and he has exactly the same VA percentage as I. We both have the same time in service and our retirement dates are only a couple of weeks apart. He stated that he is now receiving his compensation and he is also receiving his military retired pay. I just wished I could see some standardization in the system. I just want to know what questions to ask and who are the correct people I should be asking them to.

v/r

JD

[jvretiredvet]

Pre-Note #1: If you don't care to trudge through the Internal Revenue Code, you can read about VA disability compensation, military retirement pay, and taxability thereof in the IRS consumer guide Pub 525 http://www.irs.gov/p...rs-pdf/p525.pdf .

Pre-Note #2: There likely is a buncha stuff on this site about CRDP ... search and read.

Everyone I have spoke with, gets their retirement pay and also a separate check for VA compensation. My question to you is ... does your "everyone" get the full amount of their military retirement pay? Or, is some part of their MilRetPay offset by some or all or their VA comp? Unless the vet is really banged up (and, to some degree, their military retirement pay is low), it's likely that they would receive a check/deposit from DFAS as well as a check/deposit from the VA.

The only way I am aware of for a retired vet to get the full amount of their MilRetPay as well as their VA comp is for the vet to be rated 100% scheduler or TDIU.

Several close friends that retired the same time as I, all receive their money the same way. There's a lot of us in this situation.

With that said, I asked do they pay taxes and all the responses were no (only to their compensation check/they do pay taxes on their military retirement check). That's correct. Under the law, all income is taxable unless specifically excluded by law. Under IRS Code Section 61, military retirement pay (as pension) is taxable income. IRC Section 104 excludes VA disability compensation.

After reading the VA website about the 10yr plan to bring retired pay back to normal, your response makes sense. I better be careful here, if I'm starting to make sense.

However; the whole tax issue has me concerned. Why be concerned? You know, believe it or not, you and your cohort are not the first buncha folks to deal with this. Despite its failings, CRDP works (for some of us); the inequity lies in those with a 40% or less VA disability rating.

Too many vets that I have spoken with all state their compensation is tax free and have not received a W-2 or 1099 or even filed. When you wrote 'compensation', I presume that you are referring to VA disability compensation, correct? Under IRS Code Section 104, VA disability compensation is not taxable. And correct, you do not receive a Form 1099R for VA compensation.

WRT military retirement pay (pension), GENERALLY SPEAKING, military retirement pay is fully taxable. The only part of MilRetPay that may not be taxable is that for Special rules for combat-related injuries , also in IRC Section 104. Once DFAS has worked its magic about CRDP or CRSC, the amount reported in Box 2a of Form 1099R is fully taxable.

But, to complicate matters a bit, if the military service had determined that all the disability(s) of the retired military person are eligible for CRSC, the vet won't receive a 1099R, and again, this is specifically exempted from taxation.

Not saying that makes it ok, but that is what confused me so much when I read and speak with people that state the opposite. Well, I believe you're hearing what they choose to tell you, or what they think is important, or only part of the story.

I was finally able to speak with a close friend today and he has exactly the same VA percentage as I. We both have the same time in service and our retirement dates are only a couple of weeks apart. He stated that he is now receiving his compensation and he is also receiving his military retired pay. It would be speculating to know the correct, or perhaps the morer correctorest, answer without knowing everything about your friend's VA disability rating, the amount of their military retirement pay/pension, review of their annual Retiree Account Statement (RAS), whether they qualify under CRDP or were able to make the CRSC selection, and prolly a couple other things that I've forgotten.

I just wished I could see some standardization in the system. I suspect that you are seeking a one-size-fits-all answer, and that really isn't possible. Although the theory of CRDP might appear quite simple, the implementation is a little more complex.

I just want to know what questions to ask and who are the correct people I should be asking them to. You know, if there really were such a problem about taxation of military retirement compensation as you believe, there would be a great deal more written about it.

Thanks for the info; however I have one main concern with the website and your info. Everyone I have spoke with, gets their retirement pay and also a separate check for VA compensation. Several close friends that retired the same time as I, all receive their money the same way. With that said, I asked do they pay taxes and all the responses were no (only to their compensation check/they do pay taxes on their military retirement check). After reading the VA website about the 10yr plan to bring retired pay back to normal, your response makes sense. However; the whole tax issue has me concerned. Too many vets that I have spoken with all state their compensation is tax free and have not received a W-2 or 1099 or even filed. Not saying that makes it ok, but that is what confused me so much when I read and speak with people that state the opposite. I was finally able to speak with a close friend today and he has exactly the same VA percentage as I. We both have the same time in service and our retirement dates are only a couple of weeks apart. He stated that he is now receiving his compensation and he is also receiving his military retired pay. I just wished I could see some standardization in the system. I just want to know what questions to ask and who are the correct people I should be asking them to.

v/r

JD

[mistercee32]

Jvretiredvet, you seem like a very wise and intelligent guy. I have a question of my own in regards to CRDP. Right now I am currently waiting on my initial claim to be finished by my RO (Salt Lake City) start date 1 Jun 12. Not really being impatient at all. I know it has to be worked and others are in front of me. I know that I will be rated 50% or more (sleep apnea w/cpap, lumbar spine, bilate elbow and foot surgery and other problems). I am a retired vet with 20yrs active time and is currently receiving retirement pay as of 1 jun 12. My question is if I am getting retired pay and it is less than my disability comp pay how will this effect me in getting CDRP? The reason that I am asking this is that I am looking at getting a rating of about 80% or 90% and either one of those ratings will be more than my retirement pay. what would the math be like in that case? my retired pay is around $1100. If you can help me out on figuring this out I really do appreciate it. Would I be looking at getting both my retire pay and VA Comp pay?

Thanks,

MIstercee32

[jvretiredvet]

Sorry, I missed your question for a bit. While you addressed your question to my screen name, you also associated it closely with "... very wise and intelligent". As the powers that be have deemed that I am neither, I don't look for that phrase associated with my screen name.

As to My question is if I am getting retired pay and it is less than my disability comp pay how will this effect me in getting CDRP? The reason that I am asking this is that I am looking at getting a rating of about 80% or 90% and either one of those ratings will be more than my retirement pay. what would the math be like in that case? ... (snip) ... Would I be looking at getting both my retire pay and VA Comp pay?

Rather than getting into a lot of verbiage, well, a lot more than I could go into ... if you are anticipating an 80-90% VA disability rating, you can expect to receive whatever the full amount of your VA disability compensation is and almost the entire amount (± 98%) of your MilRetPay as CRDP. Then, over the next two years, that 2% or so will be returned to you and you will receive both payments in their entirety.

Here is an older Army briefing that has pretty much the same stuff: http://myarmybenefit...ility_Pay_(CRDP)_.html?serv=148 . Yeah, it's a pisser if you have <=40%.

If you receive your VA rating in 2012, it means that DFAS has done their thing as well. So, on your 2012 Retiree Account Statement (RAS), somewhere on that form will be the statement "$xxxx.xx is the amount of your CRDP." If you receive the rating in 2013, you should receive an updated RAS as well from DFAS.

Sometime, I suggest you go back to your VA notification letter. On the first page is a sort of a table that shows your VA comp, the amount of offset (if any), and the net monthly payment. If there is any offset listed, that amount can be used to reduce your 2012 taxable income. Any reasonably competent income tax preparer should know how to do this when you file your tax return (Form 1040 Line 21, paper file, attach copy of VA notification letter. If your tax preparer is set up to scan documents, you might be able to efile with the scanned .pdf notification letter included with efile.)

If: you receive the Rating Decision in 2013; and, there is an amount in the withheld column; and, you have already filed your 2012 income tax return(s), you can amend your 2012 return(s). Again, any reasonably competent ...

So, did any of the above answer your question?

Jvretiredvet, you seem like a very wise and intelligent guy. I have a question of my own in regards to CRDP. Right now I am currently waiting on my initial claim to be finished by my RO (Salt Lake City) start date 1 Jun 12. Not really being impatient at all. I know it has to be worked and others are in front of me. I know that I will be rated 50% or more (sleep apnea w/cpap, lumbar spine, bilate elbow and foot surgery and other problems). I am a retired vet with 20yrs active time and is currently receiving retirement pay as of 1 jun 12. My question is if I am getting retired pay and it is less than my disability comp pay how will this effect me in getting CDRP? The reason that I am asking this is that I am looking at getting a rating of about 80% or 90% and either one of those ratings will be more than my retirement pay. what would the math be like in that case? my retired pay is around $1100. If you can help me out on figuring this out I really do appreciate it. Would I be looking at getting both my retire pay and VA Comp pay?

Thanks,

MIstercee32