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Author Topic: Disabled Retiree Back Tax - Update  (Read 4441 times)

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Offline DoggyDaddy

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Disabled Retiree Back Tax - Update
« on: November 01, 2009, 03:54:37 am »
If you retired from the USCG or NOAA based on years of service and are later given a retroactive service connected disability rating by the VA, your retirement pay for the retroactive period is excluded from taxable income up to the amount of VA disability benefits that you would have been entitled to receive. The form 1099R reports the entire distribution because the income, when paid, was taxable under the law. A corrected form 1099R which could support the decrease in taxable income will not be issued by the PPC (Pay and Personnel Center). This policy is contained in the DOD Financial Management Regulations, VOL 7B and also is stated in the IRS instructions for form 1099R, which directs that the entire income distribution will be reported if a part is taxable and a part is not taxable.  When preparing your 1040A/1040 you should provide copies of the Form 1099R and the VA Award Letter to claim a refund of taxes paid on the excludable amount. You may also claim a refund of any taxes paid on an excludable amount in previous years by filing an amended return on Form 1040X, subject to Statute of Limitations. If in doubt on how to proceed consult a tax preparer for assistance.
[Source: USCG/NOAA Retiree Newsletter Oct-Dec 09 ++]
Joe Kleinsmith
All State VFW Post 1716 Cmdr (1998-2000)
Cpt, VFW Post Honor Guard, Retired (1991-2009)
SC-SB County Council Cmdr (1996-1997)
SFC, US Army, Retired (1971-1991)
Full Time RV'er