The U.S. Department of Veterans Affairs (VA) offers a range of veteran benefits to:
- Uniformed Servicemembers
- Veterans
- Spouses, children, or parents of deceased or disabled Servicemembers and Veterans
You may have questions about such benefits programs if you’ve served in the armed forces. For instance, you might wonder which programs you’re eligible to participate in. You may also ask, “Are VA benefits taxable?”
Whether VA benefits qualify as taxable income depends on which benefits you receive. Other factors, like which state you live in, can also influence whether VA benefits are taxable. At Fusco, Brandenstein & Rada, P.C., our New York VA disability benefits lawyers are happy to answer any questions you may have about this topic.
What Are VA Benefits?
According to the VA, veterans’ benefits include:
- Disability compensation
- Pension
- Education and training benefits
- VetSuccess (a program connecting disabled veterans with job opportunities)
- Life insurance
- Home loans
- Health care
- Burial benefits
- Benefits for dependents and survivors
This overview will focus on VA disability benefits. To qualify for VA disability benefits, a military veteran must have sustained an injury that:
- arose during their time in the service,
- was made worse as a result of their time in the service, or
- the VA can presume resulted from a veteran’s service.
VA pension benefits aren’t the same as military retirement pay. According to the U.S. Department of Defense (DoD), various military retirement pay plans are available to veterans. Factors such as when a veteran joined the service determine what specific plan they may be eligible for.
Are VA Benefits Taxable?
VA disability benefits are tax-free. The VA also explains that the degree to which certain benefits are taxable can vary from one state to another.
Specifically, different states may tax military retirement pay differently. According to the U.S. Army, the federal government considers military retirement pay to be taxable income. Thus, you must report military retirement pay when filing your income taxes. Unlike VA pension benefits, which are not taxable, military retirement pay is taxable.
VA Benefits May Be Considered Income for Purposes of Other Benefits
Do you also plan to apply for benefits through the U.S. Social Security Administration (SSA)? You may apply for Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI). You might wonder how VA benefits will affect your eligibility if so.
The answer to your question depends on which type of benefits you’re applying for. SSI is a needs-based program. Someone applying for SSI must prove they need it due to lack of income and assets.
In this scenario, VA benefits qualify as “unearned income.” That means the amount a veteran receives in benefits payments can affect how much SSI they receive.
For example, perhaps a veteran receives $300 a month in VA benefits payments. Due to a general exclusion rule, the SSA will automatically deduct $20 from the amount an applicant receives in monthly VA benefits payments. In the eyes of the SSA, this theoretical veteran would be receiving $280 a month. The SSA would deduct this $280 from the amount of monthly SSI benefits an applicant is eligible to receive.
The situation is different when a veteran receiving VA benefits applies for SSDI. SSDI benefits are available to disabled individuals who have worked in the past, paid into Social Security, and earned sufficient “work credits.” In this case, VA benefits don’t count as unearned income the way they do when applying for SSI benefits. Thus, the SSA won’t deduct them when determining how much SSDI an applicant should receive.
Are You Unhappy with Your VA Claim Decision?
There are various reasons the VA may deny your claim when you apply for benefits. Maybe the VA has denied your claim because you haven’t provided sufficient evidence showing your disability resulted from service.
According to the VA, you may have three review options after you receive a denial. They are:
- Supplemental claim
- Higher-level decision review
- Board appeal
Determining the correct means of appealing the VA’s decision can be challenging if you’ve never navigated these circumstances before. Regardless of the method you choose, you might have to provide the VA with more documentation to show why the VA shouldn’t have denied your claim.
These are tasks where an attorney can be invaluable. At Fusco, Brandenstein & Rada, P.C., our veterans disability lawyers are on hand to offer assistance and guidance. Along with answering questions like “Are VA benefits taxable?” we can help you file a thorough appeal. Get started today by contacting us online or calling us at 516-496-0400 for a free case review.
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