The short answer: No. Disability is a tax-exempt monthly benefit given to veterans who are disabled due to an injury acquired during military service. Read more about non-taxable Veterans benefits below.
Are You Disabled?
If you’re receiving veteran’s disability benefits, or any type of benefits from the VA, these are all considered tax-exempt. A disability may be physical, such as a back injury, or mental, such as PTSD (post-traumatic stress disorder.)
If your disability is greater than 10%, and incurred or aggravated by active duty, or active duty/ inactive duty-related to training, you are considered “disabled.” The VA requires medical evidence and evidence demonstrating a service-connected relationship in order to rate for a disability.
These amounts are not listed as income on your tax return, including lump-sum back payments if you are later rated and awarded VA disability benefits. (See this IRS publication for more information.)
Military disability pay—separate from veteran’s disability benefits—are also tax-exempt, under certain conditions.
Other Non-Taxable Veterans Benefits
Additionally, these veterans benefits are also non-taxable:
· Education, training, and subsistence allowances.
· Disability compensation and pension payments for disabilities paid either to veterans or their families.
· Grants for homes designed for wheelchair living.
· Grants for motor vehicles for veterans who lost their sight or the use of their limbs.
· Veterans’ insurance proceeds and dividends paid either to veterans or their beneficiaries, including the proceeds of a veteran’s endowment policy paid before death.
· Interest on insurance dividends left on deposit with the VA.
· Benefits under a dependent-care assistance program.
· The death gratuity 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.
· Any bonus payment by a state or political subdivision because of service in a combat zone.
These are additional non-taxable forms of disability income you may receive:
· benefit payments from a public welfare fund, such as payments due to blindness
· workers’ compensation for an occupational sickness or injury if paid under a workers’ compensation act or similar law (usually)
· compensatory (but not punitive) damages for physical injury or physical sickness
· disability benefits under a “no-fault” car insurance policy for loss of income or earning capacity as a result of injuries
· compensation for permanent loss or loss of use of a part or function of your body, or for your permanent disfigurement.
What Is Taxable
A military pension based on age and length of service is considered taxable income, much like a private-sector job. While no Social Security/FICA taxes are taken, the pension is considered “taxable income,” and should be included on a federal tax return.
For specific tax assistance, please seek the advice of a tax professional, or the IRS.
Call Us Today
The Herren Law Firm has helped over 4,000 Houstonians get the disability and veteran’s benefits they deserve, and we’ll be happy to help you. Call us at (713) 682-8194 or (800) 529-7707 for a free consultation if you need help with a veteran’s benefits and/or benefits disability claim. Our contingency fee arrangement means you won’t owe us anything unless we win your case.
