In appreciation for military men's services, Uncle Sam offers a series of tax breaks for veterans with disabilities. This article sheds light on each alongside how one might qualify based on the current situation.
Disabled Veteran Tax breaks: How do they work?
The tax benefits targeted at disabled veterans are applied differently from tax deduction or a credit on the federal tax return. These benefits are spread out typically over various areas and can work in multiple ways.
A tax break is partly a factor of your Residence.
Your location in the US is one of the things that determine your qualification for tax breaks. Even though some tax breaks exist at the federal income tax level, others vary from one state to another.
For example, disabled veterans that are homeowners could enjoy tax exemptions on their properties.
There are rules in each state for the qualifications for tax exemption on property alongside the exemption value.
The exemption will not reflect on the tax return you file at the state level, even though you will have them on your property bill.
A few of these tax breaks only come to play, provided there is some level of disability due to service. In Florida, for instance, they use this measure when estimating tax exemptions for property:
A veteran who has a disability from service at least 10% could get a tax exemption worth $5,000 on property tax.
Also, a total disability qualifies a veteran for a full property exemption.
Applying for Tax Breaks
Even though the criteria differ for each state, one might need to file paperwork to claim them. You can contact the agency in charge of the property tax bills to know the contact person. This way, you will learn how to get any veteran exemption for the disabled targeted at you.
When you are armed with such information, it is essential to have the exemption included in your account as soon as you can.
Some Tax Breaks are Automatic
There are cases when one might not have to file paperwork or claim a tax break or deduction on the tax return. Some tax breaks are automatic.
The disability benefits from the Veteran Affairs Department are an example. You will not include such benefits in your gross income, so there will not be a tax on them.
Here are disability benefits that cannot be taxed:
Disability compensations that are paid to the veterans or their relatives
Vehicle grants for veterans who have permanent loss of their limb or sight
Homes prepared for wheelchair living
All benefits from the dependent care assistance plan
In a case when one claimed any of these benefits as taxable income on the tax return, there might be a way to get a tax refund. You might have to file an amended tax return.
Filing a Tax Return
There are some disability exemptions or deductions that require the veteran to file a tax return. If there are benefits from the state income tax, one might need to file a state return to claim such. You might also need to file a federal tax return at times to claim a benefit as well.
Suppose the Veteran Affairs Department revealed that your disability percentage has increased. In that case, there might be a chance for a federal tax refund that you will get by filing an amended tax return. One will either report the income as either taxable or nontaxable on the tax forms, depending on the status of the disability.
If there is any change in your disability status from the last year you submitted a tax return, this status will not reflect the old tax return.
As a result, one needs to amend the previous tax returns to show the new disability status.
You might get a refund when you amend the return with a new disability percentage that is higher.
Combat disabled veterans might also benefit from this as they can be offered special compensation related to combat operations after an award for concurrent disability and retirement.
Make sure to work with a licensed tax expert, like SCHNEIDERMAN & FRIEDMAN if you are confused about handling an amended tax return. They will guide you through essential steps to go about it.
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