Readers of Tom Philpott’s Military Update column sound off.

Disability Severance Pay can be Taxed, Often Recouped

I am curious about how many other veterans out there are or were in the same boat as me.

I was medically discharged from the Army after almost nine years of service. I was given a pretty hefty severance pay. I was told the severance pay would be taxed at 28 percent because that’s how the Army does everything, but that I could file to get the taxed amount back, which I did.

Come tax season the following year I got a nasty surprise. Contrary to what I was told about severance pay being non-taxable, I owed over $6000 in taxes. 

Also, I learned that I will not be receiving disability payments from the Department of Veterans Affairs until my severance pay is paid back...Yes that's right! Instead of getting a disability check every month, the check goes to the Army to pay back the severance I received when I got out on a medical disability.

So to review: I got out in '03 as a disabled veteran and received severance pay from Army. I filed and got back the taxed amount of the severance pay. And because I did that I owed over $6000 to the IRS for my “non-taxable” severance pay. And now I can’t get VA disability checks until the government is paid back for the severance I received.

Make any sense to anyone?

KEITH SCHOENEICK
Via e-mail

Thirty years ago service disability severance pay was not subject to federal income tax. Congress thought the system was being abused and changed it for veterans who first entered the military after Sept. 24, 1975. For these veterans, disability severance pay would be non-taxable only if the disability was from a combat-related injury or ailment.

When you separated, the Defense Finance and Accounting Service didn’t have a computer program to distinguish whether your severance pay was taxable so you had 28 percent withheld but could sign a form to get those taxed dollars back.

In granting you a full tax refund, it appears DFAS officials didn’t have information to determine if your disability was combat-related and therefore assumed it was fully tax exempt. By the time you filed your tax return, however, the IRS did have information to indicate your disability severance pay was taxable.

Obviously, after separation, you applied to the VA for disability compensation and qualified. What you encountered at this point is a law that prohibits payment of both VA compensation and military disability severance pay for the same medical condition or disability.

As a result, your VA compensation is being withheld until the original military severance amount is recouped.

There likely are thousands of disabled veterans in the same boat and perhaps we’ll hear from some of them. – Tom Philpott

REJECTING TRICARE FEES

Kudos to the Senate and House Armed Services Committees for again rejecting this president's second consecutive attempt, during wartime, to increase the medical cost burdens on our nation's veterans.

This latest outrageous act of ingratitude towards retirees, along with so many other degradations and cuts in benefits and services for both active duty and retired personnel, flies in the face of this administration's religious claims of “supporting the troops.”

DORIAN DE WIND
Major, USAF-Ret.
Austin, Texas

It seems the overriding assumption of the Task Force on the Future of Military Healthcare is that almost all military retirees under age 65 continue to work. There are many who do not. Some live with chronic non-service-connected pain that precludes steady work yet doesn’t qualify them for full disability packages. Why should they be penalized with higher TRICARE fees?

There needs to be a survey done that would show how many of us under-65 retirees are not working. It is the Vietnam veteran who will take the brunt of these TRICARE fee increases endorsed by the task force because we are all in our sixties now.

Composition of the task force shows emphatically that those of us who do not work were not represented except by military organizations fighting against the increase. I would bet that not one task force member ever served in Vietnam or heard a shot in anger many times over. 

BILL MCDONALD
Colonel, USAF-Ret.
Via e-mail

Most of the 14 task force members have military experience, about half have served full military careers and several have had extensive combat experience including combat tours in Vietnam. Their biographical statements can be found at http://www.dodfuturehealthcare.net/  -- T.P.

GI BILL PILOT TRAINING

I spoke with education case manager on a GI Bill website last week about the issue of using VA education benefits to earn my private pilot’s license. I was told it was written into law that such training is not covered. I wanted to see that reference for myself so he referred me to Code of Federal Regulations, Sec. 21-4263. Nowhere in there does it say that flight training, to include private pilot training, cannot be paid by VA benefits.

The section on allowable courses and training does say that “VA will not pay educational assistance for an enrollment in a flight training course which the veteran or service member is pursuing as ancillary training for a vocation other than aviation.”

I can see where private pilot training can be viewed as an avocation. However, my goal is to be commercial pilot rated and becoming a private pilot is the first step to achieving that vocational objective.

I would like to get further clarification as to why I cannot use my benefits to begin my flight training.

KYLE LUKSOVSKY
Via e-mail

VA officials say the law itself prevents you from using your GI Bill benefits to obtain a private pilot’s license because such a license would represent a recreational pursuit rather than a vocation.

They refer to 38 U.S. Code, Sec. 3034 (3)(d)(1) which states that GI Bill benefits can be used for flight training if three conditions are met:

-- That such training is necessary for the attainment of a recognized vocational objective in the field of aviation;

-- That the individual possesses a valid private pilot certificate and, on the day the individual begins a course of flight training, meet medical requirements for a commercial pilot certificate;

-- That the flight school courses meet Federal Aviation Administration standards and are approved by both the FAA and the state approving agency.

Because these are statutory requirements, VA officials say a change in law is needed for GI Bill benefits to be used toward private pilot license training. – T. P. 

Letters may be edited for clarity or length.  Write to Military Forum, P.O. Box 231111, Centreville, VA  20120-1111, send e-mail to militaryforum@aol.com or visit www.militaryupdate.com