VA Improved Pension Benefit

Huge effort is being made to make military veterans aware of the improved VA Pension benefit. Even the Governor of Illinois thought it was important enough to get the word out that he created a non-profit that works with other corporations, service groups and individuals to educate veterans and their families about this benefit. There are nearly 22 million veterans in the U.S. and nearly $2 billion dollars in benefits that are unused every year. Most people simply don’t know the benefits are there. They aren’t even aware that they qualify and don’t know how to apply.

The best thing about this benefit is that it gives extra income to veterans and their families when they need it, with health care. Many families care for disabled family members who served in the military. Even still, there are families who have lost nearly everything because they had to pay, out of pocket, for health care.

This benefit was put in place in 1952 and, at the time, long term care wasn’t much of an issue. Families stayed nearby. Children didn’t go across the country to go to college or for their careers. It was a much simpler time. Today, however, families are busy. People move away, children are involved in more activities. Life is more complicated now.

Today, long term care is a real part of life. Family members can’t be relied upon. And, honestly, some of us would rather not have to deal with a family member’s personal care needs.

The extra money from this benefit would be helpful when you need it. No one is going to turn down money, especially when you’ve earned it and it’s yours for the taking. This is why the Improved Pension Benefit is critical.

Qualifications for Veterans & Widows

The first qualification is a discharge from the military for anything EXCEPT dishonourable.

The veteran must also have served no less that 90 days in active duty with one day during a declared state of war. This doesn’t necessarily mean combat, it just means a consecutive 90 days of active service, you were not dishonourably discharged, and it was during wartime. You must also be completely disabled, or at least 65 years of age. These benefits have been around since 1952 and the main reason veterans didn’t utilize it is because they believed they had to be disabled in order to qualify. With this benefit, you simply need to be 65 and old OR disabled, not both.

Declared States of War

The dates of service that are recognised by the Department of Veterans Affairs are included in the “Declared States of War”:

Mexican Border Period 1916-1917
WWI 1917 – 1921
WWII 1941 – 1946
Korean War 1950 – 1955
Vietnam War 1962 – 1975
Gulf War 1990 – . . .

DVA Improved Pension

For a veteran and Spouse, if one of you receives care in a facility, you could get $22,113 per year, TAX FREE.

For a single veteran, it is $18,654/year, or $1554/month, TAX FREE.

For a surviving spouse of a veteran, it’s $11,985/year, or $998/month, TAX FREE.

This benefit is available every year as long as you receive Aid and Attendance in a  long term care facility. There is a cost of living adjustment every year that increases your Social Security, usually about 3%.

The government will look at your income and assets. Your out of pocket medical expenses are deductible. If you need more care and assistance, that is a huge expense for many people. It, too, is deducted from you income. The VA looks at your assets as of the date of your application, not before. You have the option of creating an estate plan and changing your assets before you apply.

Income Testing

As an example, a couple earns $2500 each month and everything is going well, then, one day, the husband is in an accident and breaks his hip. Because of his age, he is forced to go to a long term care facility to heal. The cost of his facility care, medications and insurance premiums are $3200 per month. That is $700 more than their income. The money for that extra expense has to come from somewhere, and it’s usually from savings. This poor couple has gone from having a comfortable retirement with more than enough to live on, to losing it all because of one accident. Luckily, the husband was a veteran, which gave him the Improved Pension Benefit and he and his wife qualified for over $1800 per month. It made a world of difference to the both of them and neither one had to worry.

Asset Testing

Whatever is owned by you, meaning, what is titled in  your name, will be counted as an asset, except for your house and car, as long as it’s your primary residence. You can set things up, before you apply, to where many of your assets are put in a trusted family member’s name. You will not have as many assets and will qualify, but you know you still have access to the things you own. As far as the VA is concerned, what you own at the time of your application is what you have always owned.

Needed Documents

Often times, people lose track of their discharge papers. If you cannot find them, you can apply for a certified copy. It takes about 4 weeks to arrive, but you will get them. You will also need a marriage or death certificate for the deceased veteran. These take a little more time to receive from the county or state. These don’t need to be certified copies and you can go to the courthouse to get them, as well.

If you need to rearrange your assets, that will take a bit more time. Start when you apply for your documents so you will have enough time to get your estate planning in order. The first thing the DVA will do once they receive your application is stamp it with the date of receipt, enter it into their system and give it a case number. It could, however, take up to six months for processing, but once it’s approved, the DVA will look at the time stamp and send a retroactive check from the date it was entered into the system.

Talk to an accounting professional in order to get the most up-to-date information on any impact, if any, a benefit might have on your taxes. 

Daniel Stoica Accounting Professinal

The U.S. government knows that when you are financially responsible for a child or other dependent, you may come into financial difficulties, so the IRS allows you to take a tax credit on your income taxes. It will reduce your tax debt if you qualify for the Child Tax Credit.

If you pay someone to care for your child or other dependent while you work, or look for work, you may qualify for this tax credit. The good news is, by claiming this credit, you may even qualify for a bigger tax refund.

What is the child tax credit?

The child tax credit is a tax credit that depends on the number of dependent children in your  family. The credit depends on your income level as well. 

How do I qualify for this tax credit?

To qualify for this credit, your child or dependent must be under the age of 13. You must also pay someone to care for them while you are working or looking for work, but it must not be a spouse or your own child under the age of 19 years old. This caregive must not be your own dependent. An after school program, such as Boys and Girls Club or YMCA may qualify, but you may not claim regular school expenses.

If you care for your spouse, or any dependent who can’t care for themselves, age is not important in this instance. If you care for a disabled parent or mentally or physically challenged child, they qualify for the tax credit if they lived with you for more than six months out of the year. You are allowed to claim as much as 35% of the expenses you incur to care for them, which is $3,000 for one person or $6,000 for two or more people.

If you are employed and file as single, head of household or married filing jointly, you may apply for the child tax credit. If you receive benefits for child care through your employer, these amounts will be calculated on your return.

Why wouldn’t I apply for this credit?

If you qualify for the child tax credit, there is no reason why you shouldn’t claim it. Take advantage of all of the credits and deductions you can. It will reduce your tax burden or give you a bigger refund come tax time and, frankly, with all of the work you do caring for your child or parent or other dependent, you deserve the tax break.

 Daniel Stoica Accounting Professional

It may seem unfair that the IRS would go after a Military veteran who was wounded in the line of duty, but the fact of the matter is, people who have served in the Military are still taxpayers. The IRS has the legal right to collect taxes from anyone who has not paid their taxes, including disabled veterans.

What is VA Disability Compensation?

A veteran who is injured in the line of duty qualifies for disability benefits. The amount they are awarded is based on how badly they were injured and the number of dependants they have. The benefits are tax free, but they are not free from IRS garnishment if they owe back taxes. The IRS has the legal right to take up to 15% of their monthly disability benefits.

As with any other public assistance money, veterans rely on these benefits as their source of income. Many of them cannot work, so disability benefits may be their only source of income, and if they are helping to support a family, those checks put a roof over their heads and food on the table. However, that is not the IRS’s concern.

If a veteran owes taxes to the IRS, they will use every legal means to collect. The ironic thing is, they are the once writing those disability checks, so the Treasury Department will just send less money every month. This is known as an IRS levy. Normally, it refers to back account levies or wage garnishments, but it can be done with disability benefits, as well.

Types of wage garnishment

The IRS doesn’t only go after working people, despite the fact that it’s called “wage” garnishment. Any income you receive is considered wages, so the IRS is within its legal right to take disability benefits, as well. The IRS can even issue a levy on Social Security benefits, social security disability and VA compensation disability benefits.

Talk to a tax professional about garnishments

Sadly, there are still millions of Americans who owe back taxes to the IRS. Some of them have simply cheated the IRS, but the majority of them are good, hard working people who simply cannot afford to pay their taxes. And, since disabled veterans generally are unable to work, they have no way to pay the debt. Instead of forgiving the debt, the IRS takes the benefits from the only income they have, their disability checks, and they are legally able to do so.

The good news is that, by law, the IRS can’t take a person’s whole check. Only 30 years ago, this was not the case. Today, however, they must leave you with enough to live on and not enough to put you in financial ruin. There are ways to put the garnishments on hold, but the only way to do that is by contacting an experienced tax professional. Once you have begun to comply with the IRS to repay your back taxes, the garnishments generally stop. Again, a tax professional will help you with each step of the process so you can get free of the garnishment. And don’t believe the ads you see that claim to be able to completely eliminate your tax debt. This very rarely happens. The only way to get rid of the debt completely is with lots of paperwork and lots of proof. Once again, the advice of a tax professional will benefit you if you do choose to take this route.

A tax advisor will help you fix your tax problem and contact the IRS on your behalf. They will work with the IRS to stop the garnishment and reduce the amount you owe. They generally work on a payment plan between you and the IRS that will include monthly payments that are smaller than the amount that is taken from your monthly benefits. And, a tax advisor will also help with completing and submitting un-filed tax returns. 

Daniel Stoica Accounting Professional