Any person, who served honorably on active duty in the armed forces of the United States is considered a ‘veteran’. For their sacrifice, the U.S. government provides certain benefits to these veterans. In particular, the Internal Revenue Service is committed to providing assistance to all Veterans.
The following are some of the tax benefits and other government benefits available to U.S. veterans from the armed forces.
Benefits for U.S. Veterans
Free Tax Preparation Services
IRS and U.S. Department of Veterans Affairs entered into a Memorandum of Understanding (MOU) in 2015. The primary focus of the MOU is to provide free tax preparation services to Veterans and their families. These tax returns are prepared free by certified volunteers.
Voluntary Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE)
Under these programs, the IRS works with local community groups to train and certify VITA and TCE volunteers. VITA offers free tax return preparation to people who earn below a certain level ($54,000 or less for tax year 2016). While, TCE is mainly for people age 60 or older. The program focuses on tax issues unique to senior citizens.
Both these assistance programs also cover veterans.
IRS Free File Program
Veterans can use the IRS Free File Program to file the U.S. income tax return and any other related forms.
If the taxpayer’s income is below a certain level ($64,000 in 2016), they may qualify for free brand-name software offered through a partnership between the IRS and leading tax software providers. Some of these providers offer free federal and free state return preparation and electronic filing.
Earned Income Tax Credit
Many Veterans are eligible for various tax credits including the Earned Income Tax Credit, a refundable federal income tax credit for low- to moderate-income, working individuals and families. However, to qualify, the veteran must meet certain requirements and file a tax return. A tax return must be filed to receive the credit even if the veteran does not owe any tax or does not need to file.
Financial Education and Asset Building
Along with the Earned Income Tax Credit (EITC) and other tax credits for Veterans, the IRS have incorporated financial education and asset building programs and services such as income support, debt and credit counseling, financial education training, banking education, home ownership and small business management along with nutrition assistance, health insurance, heating/cooling allowance support and other national and local benefit programs.
Special Tax Considerations
Veterans may be eligible to claim a federal tax refund based on an increase in the Veteran’s percentage of disability from the Department of Veterans Affairs. This increase may apply retroactively. Furthermore, a refund may be available if the combat-disabled Veteran applies for, and is granted, Combat-Related Special Compensation, after an award for Concurrent Retirement and Disability.
However, note that, one may need to file an amended tax return to claim the additional benefits under the special tax considerations.
Veteran Affairs (VA) Disability Benefits
Veterans can also exclude their VA disability benefits from the gross income while reporting the income for tax purposes and, as a result, are received tax-free to the veteran. The following benefits are considered to be VA Disability Benefits:
- 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, or
- Benefits under a dependent-care assistance program.
Veteran Affairs (VA) e-Benefits
The U.S. government has also created an eBenefits portal where the veteran can apply for many of the Veteran benefits online. Veterans can apply for Veterans’ Benefits Online (VONAPP), access VA Payment History, apply for VA Home Loan Certificate of Eligibility, check on Compensation & Pension Status, and more.
Veteran family members (spouses and dependents [ages 18+]) may also be able to register and access eBenefits, view TRICARE benefits, explore eLearning opportunities, and request information from State VA offices online.
Assistance for Homeless Veterans
Often, veterans experience high rates of unemployment, poverty, and homelessness. Veteran Affairs work with other organizations to help Veterans, who are homeless by providing a variety of services such as food, shelter, clothing, health screenings, and benefits counseling.
Veteran Legal Services Assistance
Veterans are at times found facing legal issues related to eviction, home foreclosure, children-related situations, etc. Due to this reason, the VA has established a website: www.statesidelegal.org.
This website provides legal information on various topics of interest to veterans and allows veterans to find free legal help in their geographic area.
Federal Employment Assistance for Veterans
A disability can prove to be hindrance in obtaining a job. However, with the help of IRS’s Veterans Employment Program. Under the program, the disabled veteran can obtain quality training and work experience through various non-paid internship opportunities within the IRS. Often wounded warriors and Veterans could be hired for a federal position.
The department of Veteran’s Affairs publishes a booklet that describes some of the benefits available to veterans.
Taxpayers should consult a tax professional when it comes to claiming the additional benefits and filing an amended tax return, since refund claims based on an incorrect interpretation of the tax law could subject the veteran to interest and/or penalty charges.
AG TAX LLP CAN HELP
If you have any other tax-related queries, and/or need assistance with tax planning/filing please contact AG Tax. Our tax professionals are highly-experienced with U.S. and Canadian tax laws and can provide you the right guidance to handle your tax situation.
Aylett Grant Tax LLP is a full service accounting firm with a dedicated team of experts, who are highly-qualified and experienced in handling situations related to U.S., Canada and other international tax laws.
We can assist with:
- Canadian Personal and corporate tax returns
- Cross Border Taxation and Business Planning
- Personal and Corporate Taxation
- Disclosure of Foreign Assets and other information filings
- Retirement planning
- Estate Planning, Inheritance tax advice
To obtain a quote or to arrange for a consultation to discuss your tax related queries, please contact us at:
- 604-538-8735 (Greater Vancouver Area, BC)
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Disclaimer: The information in this publication is accurate as of the time of its publication. AG Tax assumes no responsibility for changes to tax legislation subsequent to the publication of this document. The information provided is for general information purposes only and should not be acted upon without seeking professional advice. If you would like to engage our services, please contact our staff and obtain authorization to send our firm confidential information. A client relationship is not created by the transmission of information. A client relationship is only formed with our firm when a scope and engagement letter signed by the firm and the potential client detailing the terms of engagement is present.
