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Thread: On the Subject of Retiring

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    On the Subject of Retiring

    I'll post here since this forum since there is no VA specific forum, and I'm retired Air Force.

    Hopefully someone has experience and can help me out. The VA gives the same canned answer when I ask.

    So I retired in in 2012 at 40%. When you retire over 30% the VA shows you as single. You have to change you dependent status which changes you compensation amount slightly. It took a little over a year for the VA to correct this and I am now getting the with dependent rate. My question is, how long does it take to receive the retroactive pay? By my math, I am owed roughly $1,400.

    Here is a timeline:
    - Retired Oct 2012
    - Claim finally came through Aug 2013 at 40%.
    - Sep 2013 put in for dependent update.
    - Oct 2014 Dependent status updated.
    - I am owed the with dependent retro pay dating back to Oct 2012. I have heard it takes 15 days, and I have heard you get it when you get it. Does anyone here have experience with this?

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    Banned sandsjames's Avatar
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    Quote Originally Posted by Mata Leao View Post
    I'll post here since this forum since there is no VA specific forum, and I'm retired Air Force.

    Hopefully someone has experience and can help me out. The VA gives the same canned answer when I ask.

    So I retired in in 2012 at 40%. When you retire over 30% the VA shows you as single. You have to change you dependent status which changes you compensation amount slightly. It took a little over a year for the VA to correct this and I am now getting the with dependent rate. My question is, how long does it take to receive the retroactive pay? By my math, I am owed roughly $1,400.

    Here is a timeline:
    - Retired Oct 2012
    - Claim finally came through Aug 2013 at 40%.
    - Sep 2013 put in for dependent update.
    - Oct 2014 Dependent status updated.
    - I am owed the with dependent retro pay dating back to Oct 2012. I have heard it takes 15 days, and I have heard you get it when you get it. Does anyone here have experience with this?
    Because you are retired, you will not recieve the full amount. Since you don't get concurrent pay until 50%, that 40% will be deducted from your retirement pay and will be tax free. What that means is that all you will get back is the difference in the amount of tax you would have payed on amount the VA payed out.

    They will figure out how much they owe you. They will then contact DFAS and work out what the taxed amount would be.

    Really under 50%, if you are retired, is pointless...other than a couple benefits specific states have.

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    Senior Member TJMAC77SP's Avatar
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    Quote Originally Posted by sandsjames View Post
    Because you are retired, you will not recieve the full amount. Since you don't get concurrent pay until 50%, that 40% will be deducted from your retirement pay and will be tax free. What that means is that all you will get back is the difference in the amount of tax you would have payed on amount the VA payed out.

    They will figure out how much they owe you. They will then contact DFAS and work out what the taxed amount would be.

    Really under 50%, if you are retired, is pointless...other than a couple benefits specific states have.
    There is a minor, repeat minor tax benefit since VA disability is not taxed. Other than that you are absolutely correct.
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    Quote Originally Posted by Mata Leao View Post
    I'll post here since this forum since there is no VA specific forum, and I'm retired Air Force.

    Hopefully someone has experience and can help me out. The VA gives the same canned answer when I ask.

    So I retired in in 2012 at 40%. When you retire over 30% the VA shows you as single. You have to change you dependent status which changes you compensation amount slightly. It took a little over a year for the VA to correct this and I am now getting the with dependent rate. My question is, how long does it take to receive the retroactive pay? By my math, I am owed roughly $1,400.

    Here is a timeline:
    - Retired Oct 2012
    - Claim finally came through Aug 2013 at 40%.
    - Sep 2013 put in for dependent update.
    - Oct 2014 Dependent status updated.
    - I am owed the with dependent retro pay dating back to Oct 2012. I have heard it takes 15 days, and I have heard you get it when you get it. Does anyone here have experience with this?
    Quote Originally Posted by sandsjames View Post
    Because you are retired, you will not recieve the full amount. Since you don't get concurrent pay until 50%, that 40% will be deducted from your retirement pay and will be tax free. What that means is that all you will get back is the difference in the amount of tax you would have payed on amount the VA payed out.

    They will figure out how much they owe you. They will then contact DFAS and work out what the taxed amount would be.

    Really under 50%, if you are retired, is pointless...other than a couple benefits specific states have.
    This is not how it worked for me, but that was 5 years ago...meaning, no one sends you any back money. You get the tax back from the IRS when you file

    I received a 20% disability 14 months after retirement.

    As you all have said, no concurrent receipt, so anything I would have gotten paid by the VA would have been deducted from retirement...that's a wash. Except for the tax benefit as you mentioned.

    However, the VA did NOT send me any 'back money.' nor did DFAS. They don't owe you anything. They sent me a letter with the amounts and months I would have been paid (and would have been deducted from retirement) and instructions that I could do one of two things.

    For simplicity, let's assume I get %200 per month.

    1. Go back and file an amended 2013 return, let's say I retired in Apr 2013. That was 9 months of "retired time" for which I paid taxes on that amount. I can now amend my 2013 return to reduce my income by $1800 and get a refund of the tax. So, if I was in the 15% tax bracket, I would get a refund of $270 from the IRS.

    2. The other thing I could do, is take the entire 14 months worth, or $2800 and offset that for the current years' taxes. So, I would subtract $2800 from this years' taxable income.

    I chose option 2. A year later, I get an automated letter from the IRS that said my claimed retirement income did not match my 1099 they received, so I owe tax on the difference. Don't worry about this...it is an automated response. You do have to answer it, but you just write a letter explaining the offset and send a copy of the letter you got from the VA and then an actual person reviews your case. Once I did that, I got another letter in a few weeks from the IRS saying it's all good.

    So, yes, as others have said, there is only a tax benefit for this amount. The only other benefit as far as retirement pay is if you have a former spouse collecting a portion of your retirement pay, she does not get a portion of your Disability Check. So, if she would've otherwise gotten 20% of your $2000 retirement ($400), she'll now get 20% of your $1800 check ($360). Figures are for illustrative purposes only and do not represent what a 40% disability would pay...it's more than that.

    The next month, you start getting two checks everything month...one from the VA, and your retirement check with that same amount deducted, which then the tax-free is automatic.
    Last edited by Measure Man; 01-17-2015 at 03:10 AM.

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