Veterans Urged to Claim Refund for Tax Overpayments on Disability Severance

The IRS has urged veterans who received disability severance payments after January 17, 1991, and reported it as taxable income, to file Form 1040X, Amended U.S. Individual Income Tax Return, to claim a credit or refund of the overpayment.

Veterans who received a one-time lump-sum disability severance payment when they separated from their military service would receive a letter from the U.S. Department of Defense (DoD) with information explaining how to claim their tax refunds. Veterans have one year from the date of the DoD letter, or three years after the due date for filing the original return for the year the disability severance payment was made, or two years after tax was paid for the year the disability severance payment was made, to claim the refunds. Moreover, veterans can submit a claim based on the actual amount of their disability severance payment by completing Form 1040X and carefully following the Instructions to Form 1040X.

In addition, veterans claiming refunds for overpayments attributable to their lump-sum disability severance payments should:

  • complete and file IRS Form 1040X for the tax year the disability severance payment was made;
  • write either "Veteran Disability Severance" or "St. Clair Claim" across the top of the front page of the Form 1040X; and
  • mail their completed Form 1040X, with a copy of the DoD letter, to: Internal Revenue Service 333 W. Pershing Street, Stop 6503, P5, Kansas City, MO 64108.

Veterans who did not receive the notice from the DoD and received a disability severance payment that was reported as taxable income could still file a claim by including the necessary documentation to file with their Form 1040X. The IRS advises these veterans to contact the National Archives, National Personnel Records Center, or the Department of Veterans Affairs to obtain the required documentation. The IRS also urged veterans with questions about claiming a tax refund for disability severance payment to call the IRS toll free at (833) 558-5245 ext. 378, between 7 a.m. and 7 p.m. local time.

For questions or assistance, contact one of our tax professionals at 717-569-2900 or click the button below.
 
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