Tax Benefits For Veterans
We’re already in February and tax season is now underway. Some people enjoy this time of year if they are getting a tax refund. If they’re not and they have to pay taxes, then they may be delaying submitting their taxes for as long as possible.
The tax code offers many tax benefits for veterans. However, if they’re doing their taxes themselves, then they may not be aware of what benefits apply to them if they’re not actively looking for them. If you’re receiving payments from the Department of Veterans Affairs (VA), you may be confused about what is and what is not taxable.
The tax submission deadline for 2023 is April 18. Getting ready to start working on your taxes? Here are some things you should know as a veteran.
What is Not Taxed
Keep in mind that certain types of compensation are not taxable. They include:
- Benefits from a dependent care assistance program.
- Interest from VA life insurance policies.
- Money paid to a survivor of a member of the armed forces who died after September 10, 2001.
- Payments made under the compensated work therapy program.
Veterans can receive tax benefits for their state taxes if they were either honorably discharged or released from active duty under honorable circumstances. They may receive exemptions on property taxes, especially if they are disabled. This varies by state. For example, in New York, a disabled veteran may receive one of three different property tax exemptions on their primary residence. The exemption amount varies based on type of service, disability rating, and the value of the exemption as determined by the county. It’s possible for a veteran to save thousands of dollars, so be sure to take advantage of this.
Also, military pay may be taxed differently in each state, so keep that in mind if you have moved out of state recently. If an honorably discharged veteran dies, benefits are often transferred to a surviving spouse. Every state has a revenue website that outlines the available state benefits for veterans and how to apply for them, so don’t overlook this.
As a veteran, you may be confused about what is considered taxable income and what is not. For example, military retirement pay is taxable as federal income tax. However, it is not considered earned income for Social Security purposes. If you pay premiums for the Survivor Benefit Plan, it is not considered taxable income. If you receive veterans education benefit payments for education and training, those are also not taxable. Neither are disability benefits received from VA, including pension payments, disability compensation, and grants for home modifications.
Learn More About Veterans Benefits
Tax time can be tricky for veterans. Be sure to maximize your benefits so you can pay less or get a bigger refund.
A White Plains veterans disability benefits lawyer from The Law Office of Michael Lawrence Varon can work with you to ensure you have a better understanding of your benefits. Schedule a free consultation today by calling 914-294-2145 or filling out the online form.