Publication 5322 (Rev. 10-2018)

Attachment: Job Aid – 1040X

This document provides guidance for assisting with preparing 1040x Amended Tax Returns as a

result of the Combat-Injured Veterans Tax Fairness Act passed in 2016.

Background: SPEC and its partners have a great opportunity to assist some disabled veterans who

sacrificed for our country and, after separation, received a lump-sum disability severance payment

that was inadvertently taxed. As a result of the Combat-Injured Veterans Tax Fairness Act, in July

2018, over 130,000 veterans received a letter from the Department of Defense (DoD) explaining how

to claim the refund. They have the option to use the actual amount of their severance payment to

claim their refund or the simplified method, claiming a standard refund amount based on the

calendar year (an individual’s tax year) in which they received the severance payment.

Two options for veterans to claim a disability severance pay (DSP) tax refund:

1. The simplified method

can be used to claim a standard refund amount that doesn’t requir

veterans to have the original tax return or contact the IRS to obtain information from the tax

return. The standard refund amount may be larger or smaller than the refund based on the

actual amount of their DSP from the original return.

2. Veterans can submit a claim based on the actual amount of their DSP by completing Form

1040X, carefully following the instructions for Form 1040X.

SPEC has approved the use of the simplified method as within the scope of service for VITA/TCE

programs. Additionally, SPEC has made allowances to its Quality Site Requirements so partners

can prepare Form 1040X more efficiently for veterans who choose to use the simplified method. It’s

also at the site’s discretion to allow volunteers certified in Advanced to complete traditional 1040X

returns for this refund but only if required information and tax preparation software is available.

Completing Form 1040X using the Simplified Method (See Job Aid for specific details)

Using the calendar year (the individual’s tax year) in which they received the severance payment.

Write “Disability Severance Payment” on line 15 of Form 1040X and enter on lines 15 and 22 the

standard refund amount listed below that applies:

x $1,750 for tax years 1991 – 2005

x $2,400 for tax years 2006 – 2010

x $3,200 for tax years 2011 – 2016

Simplified Method for survivors receiving Letter 6060-D

Survivors of veterans who received Letter 6060-D that their spouse or relative qualified for DSP tax

refunds can also submit a claim for credit or refund. Additional steps may include:

x IRS Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer,must

accompany Form 1040X, unless the person filing the return is the surviving spouse of the

service member and filed a joint tax return with the service member for the year the veteran

received Disability Severance Pay.

x Modifying the example explanation for Part III of Form 1040X as follows:

“I attest my _______ (spouse or other) met the circumstances listed in attached Letter

6060-D which entitles the estate to receive a refund of taxes withheld from the Disability

Severance Pay issued to my______ (spouse or other) in XXXX. A DSP refund claim has

not been previously filed.”

FACT SHEET

Assisting Veterans with Lump-Sum Disability Severance

Pay Refunds

Publication 5322 (10-2018) Catalog Number 71991S Department of the Treasury Internal Revenue Service www.IRS.gov

Attachment: Job Aid – 1040X

Veterans who did not receive a letter

x Veterans eligible for a refund who did not receive a letter from DoD may still file Form 1040X

to claim a refund but must include the required documentation listed in Publication 3, Armed

Forces’ Tax Guide.

x Veterans who do not have the required documentation to file a claim should contact the

National Archives, National Personnel Records Center, or the

Department of Veterans

Affairs.

x Veterans who have not received a letter or have a question regarding the Combat Injured

Veterans Tax Fairness Act can send an email to DFAS at dfas.cleveland-oh.jjf.mbx.dfas-irs-

combat-injured-[email protected]il.

Exceptions to SPEC policy and Quality Site Requirements (QSR)

x Simplified method for preparing Form 1040X for DSP tax refunds is approved as within scope

for volunteers with Basic or higher certification. These returns can be prepared without using

tax software. A fillable Form 1040X is available at irs.gov

x At the site’s discretion, volunteers certified in Advanced may prepare a traditional Form

1040X for DSP refunds but only if the tax preparation software is available and the taxpayer

has a copy of the prior year return and all required information.

To ensure consistency, the following process to the QSR will apply.

QSR #1 Certification – minimum tax law certification requirement:

x Basic - if using simplified method.

x Advanced - if completing traditional Form 1040X.

QSR #2 Intake/Interview and Quality Review

Using the simplified method, veterans will only be required to complete the personal information

section in Part I of Form 13614-C. The following questions should be addressed:

x Does the veteran meet the circumstances listed in Letter 6060-A (or 6060-D) to qualify for

DSP tax refund?

x Did the veteran previously file and receive a DSP tax refund or exclude the DSP from their

original Form 1040?

QSR #4 Reference materials

Sites are encouraged to maintain copies of this Fact Sheet and the attached Job Aid for completing

Form 1040X

QSR #6 Timely filing tax returns

Forms 1040X cannot be e-filed. Volunteers should remind veterans to mail their Form 1040X to the

IRS address provided within one year from the date of their Letter 6060-A (or 6060-D).

Additional information:

x IRS will pay interest on Veterans’ DSP tax refunds. Note: IRS will issue a Form 1099-INT.

x A claim can be filed for the standard refund amount even if the veteran or estate already

filed a claim for the DSP actual amount or excluded the DSP from their original Form 1040,

in which case, the veteran or estate can only claim the difference between the standard

refund amount and the tax on the DSP amount.

Additional resources:

x More information on this issue is available on IRS.gov along with FAQs

x Veterans may contact the National Archives, National Personnel Records Center,or the

Department of Veterans Affairs to obtain their required documentation for submission

x Defense Finance and Accounting Service website

Fact Sheet – Job Aid – Assisting Veterans with Lump-Sum Disability Severance Pay Refund

JOB Aid

Assisting Veterans with Lump-Sum Disability Severance Pay Refund

Fill out the

taxpayer personal

information

section, notating

the year being

amended

x Write “Disability

Severance Pay” on

line 15

x Fill in the standard

refund amount on

line 15B & line 22

Write “Veteran

Disability

Severance” or “St.

Clair Claim” at top

of page 1

Standard Refund Amounts for Simplified Method

$1,750 for tax years 1991 – 2005

$2,400 for tax years 2006 – 2010

$3,200 for tax years 2011 – 2016

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Fact Sheet – Job Aid – Assisting Veterans with Lump-Sum Disability Severance Pay Refund

Assisting Veterans with Lump-Sum Disability Severance Pay Refund

Continued

Provide an

explanation in Part

III of Form 1040X

The following is an

example of

explanation that

can be used:

“I attest I met the

circumstances listed

in attached Letter

6060-A which

entitles me to a

refund of taxes

withheld from the

Disability Severance

Payment issued to

me in XXXX. I have

not previously filed

a Disability

Severance Payment

refund claim.”

Sign & Date Form 1040X on page 2 and attach copy of letter from DFAS (Letter 6060-A or 6060-D)

Mail Form 1040X & attachments to:

Internal Revenue Service

333 W. Pershing Street, Stop 6503, P5

Kansas City, MO 64108

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