Some combat-injured vets are due a special tax refund

Military improperly withheld taxes from severance payments

Eye on Veterans
April 09, 2018 - 1:00 pm

Photo courtesy Internal Revenue Service

There’s good news this year for more than 100,000 wounded veterans who had taxes withheld from a severance payment that should not have been taxed.

It’s thanks to a law Congress passed in 2016: The Combat Injured Veterans Tax Fairness Act.

The Defense Department is – finally, lawmakers say – in the process of notifying veterans who may qualify for a refund – because the Defense Department, beginning as far back as the 1991 Gulf War, improperly withheld taxes from a one-time, lump-sum disability severance paid to some men and women who’d been injured in combat.

Eye on Veterans talked with the two key U. S. Senators – Virginia Democrat Mark Warner and Arkansas Republican John Boozman – who learned of the problem and created a fix:

What should you do if the Defense Department notifies you that it improperly withheld taxes from your severance?

You will need to file an amended tax return for the year in which you were paid the severance.  That will get the money back from the IRS.  You will want to file the amended return soon after hearing from the Defense Department.  The law allows refunds only to those veterans who file an amended return within one year of being notified.

If you believe taxes were withheld from your severance and you don't recieve a DoD notification, Senators Boozman and Warner suggest you contact your local member of Congress.

    Contact us about this article or share your story at