Veteran Minnesota Tax Credit

TAX CREDIT, TAX CREDIT For Military Service!

You may already know about this benefit, I just learned about it and thought there may be others like me that did not have the information. The 2008 omnibus tax bill in Minnesota (Laws 2008, ch. 366) provides for an income tax credit for past military service. It is a $750.00 credit. A credit is a deduction dollar for dollar against income tax owed. The credit took effect in tax year 2009 for returns filed in 2010. Eligible filers can sue form M-1C to claim the credit.

So who is an eligible filer?

To qualify for the credit, a veteran must:

•have served in the military (this includes the National Guard and Reserves)for at least 20 years;

•have a service-connected disability rated by the U.S. Department of Veterans Affairs (VA) as being 100 percent total and permanent; or

•be eligible for military retirement pay.

A veteran must have at least $750.00 of state income tax liability to receive full credit amount. A veteran with less than $750.00 in income tax liability is eligible for a credit up to the amount of the tax. What this means for example- In tax year 2014, a single veteran without dependents with the standard deduction, would need to have earned $24,069.00 (Federal Adjusted Gross Income) to receive the full credit.

Unfortunately, the credit is not available to high income earning veterans. The military service credit is phased out for veteran with Federal Adjusted Gross Income (FAGI) of $30,000.00 or more. When $30,000.00 of income is reached, the credit is reduced by 10 percent in excess of $30,000.00. When income (FAGI)is over $37,500.00 there is no longer a credit available to take.

Social Security benefits are not included in FAGI, so receipt of benefits will not subject an individual to the income based phaseout. However, if a veteran has no taxable income or income over $37,500.00 there is not tax credit.

Expedited Veterans Disability Process

Previously I had written about how social security treats VA disability ratings when a disabled servicemember attempts to obtain disability benefits.

Although there is no increase in the weight given to a VA disability rating, there is a new expedited Veterans disability process. 

If you are a veteran with a 100% disability rating from the VA, you have a new process that under which Social Security will treat your application as high priority and issue an expedited decision.

To receive expedited treatment, you must prove, with a VA notification letter,  that you have a 100% rating.  That with your application for Social Security disability benefits begins the process.

Unfortunately, Social Security only expedites the process, it give no additional weight to the fact you have a 100% rating from the VA, and it does not represent, in any manner, that you will be approved for benefits.

Social Security emphasizes that even with a 100% VA rating, you must still meet the strict eligibility requirements for a disability finding.

From a public relations standpoint such an program sounds great, but without additional weight given to the VA rating in the Social Security arena in most cases it will just allow a quicker receipt of a denial.

Most veterans coming out of the service with a disability are young and although disabled, social security’s disability program is designed for applicant’s over 50 years of age.  Although I have had some success in obtain benefits for younger individual, it is very difficult.  The best thing that could happen , for the disabled veteran, would be adopting of a regulation that requires Social Security to give significant weight to the 100% VA rating.

For more information – go to http://ssa.gov

Since writing this blog, I have spoken with several veterans trying to obtain social security benefits.  They have misconstrued the expedited process thinking it assures benefits to a veteran with a 100% disability rating.  After explaining that all the process does is allow a earlier look see, there has been a lot of anger displayed.  Unless their disability meets/equals a listed impairment, they most likely will receive a denial.  Most of the Veterans are young, and a younger individual has a tough time obtaining benefits.  Explaining all of this, they feel that the process really is of no benefit to them.  

In many cases, those suffering PTSD, will need a hearing before an administrative law judge to have a real chance at benefits, just because of the need to prove how disabling the PTSD