Military medical separation taxed

[mommiemara]

What is the name of your state (only U.S. law)? OhioMy husband was medically separated from the Army mid 2008 due to a injury sustained during a training accident. He was inover 8 years so we recieved a substatial medical separation payout. They taxed this at 28% but I keep hearing this money is tax exempt. Weshould have our W2 by the end of the week and I'm trying to find out if we should not have been taxed on thi money and what route we take to recover the money. Thank you very much

 

[LdiJ]

What is the name of your state (only U.S. law)? OhioMy husband was medically separated from the Army mid 2008 due to a injury sustained during a training accident. He was inover 8 years so we recieved a substatial medical separation payout. They taxed this at 28% but I keep hearing this money is tax exempt. Weshould have our W2 by the end of the week and I'm trying to find out if we should not have been taxed on thi money and what route we take to recover the money. Thank you very much

If the military withheld taxes on it, then its almost guaranteed to be taxable income. The military is quite good at getting things right.

However, get yourself a consult with a local tax professional, preferibly someone who has experience with military medical separations (a local office near a military base, for example, rather than one of the national firms).

 

[mommiemara]

Well no I read that if the discharge was the result of injury sustained wile on duty it was tax exempt. See the thing is they with hold your VA money till you pay the severance back because of double dipping or something. So they with hold VA till you pay the whole severance back but VA is tax exempt. See where this whole thing is odd. Lol asto the military being good at what they do I in the last 8 years have seen them screw up sooo much paperwork wise its rediculous. They have messed up my husbands on many occasions to.