How do I recoup taxes taken on severance pay I received after being discharged from the Army?

by William L. Stunkel, CPA | Feb 05, 2019

I was recently discharged from the Army and received severance pay that was taxed. The severance pay was not supposed to be taxed. How do I recoup those taxes when filing?

I would recommend reading PICPA’s blog on the Combat-Injured Veterans Tax Fairness Act of 2016, particularly the paragraph (and items following) that begins with “If you did not receive a joint letter…” If the severance pay was reported as taxable in a prior year, then an amended return should be filed per the instructions summarized in the blog. If it is for the 2018 calendar year or a nonfiled return, then I would recommend submitting a return without showing the severance as taxable. File the return to the address that can be found in the IRS FAQs (third question from the bottom).

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: William L. Stunkel, CPA, is director of small-business services with Holsinger PC in Wexford, Pa.

The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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