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Tax Information for Veterans with Disabilities

Tax Information for Veterans with Disabilities
The Internal Revenue Service is committed to providing assistance to veterans and veterans with disabilities. We work with community and government partners to provide timely federal tax-related information to veterans about tax credits and benefits, free tax preparation, and asset-building opportunities available to them.
VA Disability Benefits. Do not include disability benefits you receive from the U.S. Department of Veterans Affairs (VA) in your gross income. In particular some of the payments which are considered disability benefits include:
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.
The VA publishes an annual benefits booklet, a comprehensive guide for Federal Benefits for Veterans, Dependents and Survivors.
If you are a military retiree and receive your disability benefits from the VA, see IRS Publication 525 for more information.
Rehabilitative Program Payments
VA payments to hospital patients and resident veterans for their services under the VA’s therapeutic or rehabilitative programs are no longer included in income. For more information, please see IRS Revenue Ruling 2007-198.
Tax Credits
Many disabled 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. The Work Opportunity Credit is available to employers as an incentive to hire veterans with disabilities. Those requiring free help in preparing their income tax returns should check out the Volunteer Income Tax Assistance Program.
Homeless Veterans
Veterans with disabilities experience high rates of unemployment, poverty, and homelessness. The VA and other organizations work together through neighborhood stand-downs to help disabled veterans who are homeless. This collaborative effort provides a variety of services such as food, shelter, clothing, health screenings, and benefits counseling.
Federal Employment
If you are a veteran and have a VA disability rating of 30% or more, you may be hired non-competitively for any federal position for which you qualify.   For more information, check out the U.S. Office of Personnel Management and IRS’s America’s Heroes Program.
Do you need alternate formats for IRS forms and publications?
The IRS is committed to making every document on its Web site accessible to everyone, including veterans with disabilities. If you need help accessing these products, please visit our Accessible IRS Tax Products page.  See also other forms and publications for people with disabilities.
Active Duty Military
This page is intended for veterans with disabilities.  If you are looking for information for service members on active duty, please visit the IRS Military Web page.

Tax Information for Veterans with Disabilities

The Internal Revenue Service is committed to providing assistance to veterans and veterans with disabilities. We work with community and government partners to provide timely federal tax-related information to veterans about tax credits and benefits, free tax preparation, and asset-building opportunities available to them.

VA Disability Benefits.

Do not include disability benefits you receive from the U.S. Department of Veterans Affairs (VA) in your gross income. In particular some of the payments which are considered disability benefits include:

  • 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.

The VA publishes an annual benefits booklet, a comprehensive guide for Federal Benefits for Veterans, Dependents and Survivors.

If you are a military retiree and receive your disability benefits from the VA, see IRS Publication 525 for more information.

Rehabilitative Program Payments

VA payments to hospital patients and resident veterans for their services under the VA’s therapeutic or rehabilitative programs are no longer included in income. For more information, please see IRS Revenue Ruling 2007-198.

Tax Credits

Many disabled 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. The Work Opportunity Credit is available to employers as an incentive to hire veterans with disabilities. Those requiring free help in preparing their income tax returns should check out the Volunteer Income Tax Assistance Program.

Homeless Veterans

Veterans with disabilities experience high rates of unemployment, poverty, and homelessness. The VA and other organizations work together through neighborhood stand-downs to help disabled veterans who are homeless. This collaborative effort provides a variety of services such as food, shelter, clothing, health screenings, and benefits counseling.

Federal Employment

If you are a veteran and have a VA disability rating of 30% or more, you may be hired non-competitively for any federal position for which you qualify.   For more information, check out the U.S. Office of Personnel Management and IRS’s America’s Heroes Program.

Do you need alternate formats for IRS forms and publications?

The IRS is committed to making every document on its Web site accessible to everyone, including veterans with disabilities. If you need help accessing these products, please visit our Accessible IRS Tax Products page.  See also other forms and publications for people with disabilities.

Active Duty Military

This page is intended for veterans with disabilities.  If you are looking for information for service members on active duty, please visit the IRS Military Web page.

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Daniel Stoica Consulting, Accounting and Tax Professional based in Roscoe, Illinois, U.S.A. Serving Local, National, and International Clients