Is VA Disability Taxable?

American taxation is complex, and we sometimes receive questions from veterans over whether certain income sources are taxable. This includes things like Social Security and VA disability benefits. In this article, we’ll focus on how VA disability benefits are related to various income streams, and how taxes work for veterans in Florida.

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Is VA Disability Taxable?

No, VA disability benefits are not taxable at the federal or state level, no matter where you reside.

The IRS doesn’t even require disabled veterans to mention disabled benefits on a tax return. You would only ever declare it, in certain scenarios, if it would help secure a better tax refund. Other than that, what you see is what you get regarding your disability benefits.

What If You’re Still Employed?

Employment status has no impact on your disability benefits either, regardless of your disability rating. If you still work and earn income, you would be responsible for taxes on ordinary income, but it has nothing to do with disability. Also, since Florida has no state income tax, you only have to pay income taxes at the federal level.

What If You Receive Social Security Benefits?

You may have to pay taxes on social security benefits if you receive both social security and disability benefits. Once again, this does not involve paying taxes on the disability portion.

What About Military Retirement Pay?

Military retirement pay is taxable at the federal level. In most places outside of Florida, this would involve state taxes as well. It still has no bearing on disability benefits, but those benefits may reduce the amount of money you receive from military retirement pay.

This is specific to each individual, however. So it’s best to speak to a tax professional to determine how VA benefits affect military retirements and the subsequent taxes on military pay.

We hope this clarifies any concerns you have regarding benefits and taxation. Fortunately, Florida is one of the most veteran-friendly places in the country. If you see something you don’t understand about disability benefits, contact the VA or the FDVA to learn more.

The latter also publishes a benefits guide, which has lots of helpful information on office locations, legal assistance, employment assistance, and more.

Also, as always, we’re happy to field questions at SRQ Vets. If we don’t know the answer, we’ll refer you to an expert who does. Our mission is to provide disabled and retired service members with the most comprehensive support possible.

You can reach us anytime by calling 941-777-8387.

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