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4 Min. Read

Veteran Tax Benefits: The Ultimate Tax Guide

The U.S. veterans are owed a debt of gratitude by their country that can never be repaid.

Fortunately, the IRS has a system in place that can go some way to helping veterans readjust to civilian life. This is especially true if they have become disabled during or after their service.

As a veteran, you can take advantage of a number of specific benefits to maximize your return when you file your income taxes.

The federal government offers veterans tax benefits, as do most states. But what are these veteran’s tax benefits? We’ve put together a guide to help you navigate the waters of filing your taxes as a veteran.

Here’s What We’ll Cover:

Am I Eligible?

What Is Active Duty?

The Tax Benefits for Veterans

Taxable Benefits for Veterans

How to Apply for Veterans Benefits

Key Takeaways

Am I Eligible?

For you to be eligible for veteran tax benefits, you have to have served at least 24 continuous months in active duty. You must also have not been released with a dishonorable discharge.

However, this is not true for veterans who enlisted before September 8th, 1980. As no minimum length of service is necessary to be considered a veteran.

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What Is Active Duty?

Active duty - or active services - means that you’ve served as a member of the:

  • Army
  • Navy
  • Air Force
  • Marine Corps
  • Coast Guard

You are also considered on active duty if you are a commissioned officer of the:

  • Public Health Service
  • Environmental Services Administration
  • National Oceanic and Atmospheric Administration

It is important to mention that a veteran counts as a former member of the armed forces who have been discharged. If you are still on active duty then you are still an active member of the armed forces.

Both work differently for tax purposes.

The Tax Benefits for Veterans

The IRS allows a number of tax benefits to be made available for veterans and their families at the federal level. There are some common benefits that all veterans should be aware of, these include:

  • Disability pension
  • Disability compensation
  • Education and training allowances
  • Dependents and survivors
  • Life insurance
  • Housing grants
  • Compensated work therapy program

These tax benefits are not taxable. This means that these sources of income do not have to be reported as income on your federal tax return.

If you are a disabled veteran then you may be eligible to claim a federal tax refund based on two situations:

  • An increase in the veteran’s disability percentage - which may include a retroactive determination.
  • A combat-disabled veteran is granted combat-related special compensation after an award for concurrent retirement and disability.

Taxable Benefits for Veterans

There are three further benefits that will require you to pay taxes, although there can be certain veteran exceptions. These benefits are:

  • Retirement Pay: a service member who has been on active duty for at least 20 years may receive pay upon retirement. Retirement pay is usually reported as taxable income.
  • Severance: If you were injured on active duty, you can elect to receive a lump-sum disability severance payment when you leave the military.
  • Health Care: Veterans are provided with a number of health care services. Any caregiver who provides personal care services to veterans is also supported.
Accounting that makes you look good.

How to Apply for Veterans Benefits

There is a joint website of the U.S. Department of Veterans Affairs and the Department of Defence called eBenefits.va.gov. This site houses all of the information and resources for veterans.

Through this website, veterans can:

  • Search and apply for benefits
  • View their disability compensation claim status
  • Access official military personnel documents
  • Register for and update direct deposit information

Key Takeaways

In times of national emergencies, the U.S. Army is here for us. So when they return from wartime service the country should be there for them.

Therefore it’s important that military veterans are given the opportunity to receive these tax benefits. Especially when they are reintegrating themselves from military service back into civilian life.

If you are a veteran, be sure to research exactly what benefits you are eligible for. This is so that you can take the most advantage of what the government is offering you when you’re filing taxes.

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