VA DECIDES TO ISSUE 1099’s TO CAREGIVERS
February 1, 2020
February 1, 2021
VA DECIDES TO ISSUE 1099’s TO CAREGIVERS CLAIMING THE IRS WILL NOT TREAT IT AS “INCOME” – NOT SO FAST THOUGH, THE IRS LAWS WILL SEE IT AS INCOME, UNTIL IT IS “PROVEN”TO BE NON-TAXABLE.
TAMPA, FL
As tens of thousands of disabled veterans and their caregivers are trying to acclimate to a set of “New Rules” VA implemented on October 1, 2020, under the claim that the MISSION Act 2017 required them, (it did not, and you can read it for yourself here: https://www.congress.gov/.../115th.../senate-bill/2372/text),
VA has quietly changed course on its obdurate position that the Caregiver Stipend, formally referred to by VA “…as a recognition of the (Caregiver’s) service to the veteran”. (You know, just like the gratuity / tip you leave your server for a good service at your favorite restaurant!). https://www.caregiver.va.gov/....
While this money is still NOT TAXABLE according to the Internal Revenue, (VA admits that), they have decided to begin issuing a NEC 1099 (formerly the 1099 MISC). The same document the IRS requires that taxpayers use to report miscellaneous income. https://www.irs.gov/pub/irs-pdf/f1099nec.pdf...Not that this will be confusing to anyone, (please excuse our sarcasm!).
According to the IRS, over 4.2 million people used the free, electronic-filing services available to file their tax returns last year. The automated ones, (such as HR Block Taxcut, Turbo Tax and others) are fairly simply and most people use these to file their tax returns themselves, without consulting an accountant.
Many disabled veterans receive VA disability compensation and Social Security disability. In many cases, both are non-taxable. In others, the Social Security may not be, such as if the spouse works. The issue arises from this latest VA development, that if the taxpayers are not fluent in tax laws, rules and processes, they risk incorrectly reporting on their return, the VA Caregiver Stipend as (taxable) “income” – which can begin an avalanche of repercussions such as increased tax liability, disqualification for some income based programs, and lengthy delays for the taxpayers to receive any actual refund they may be due by the time the corrections are made to their tax return.
While the VA issuing the NEC-1099 to Caregivers is not invalid or incorrect, their complete lack of information dissemination to those who will receive them is contemptable. Once again, VA makes abrupt, significant changes without offering a modicum of information to their sole customer – the Veteran’s and their families.
This matter can have an impact on any tax refund you may be entitled to or liability you may be responsible for. Because of the potential impact this development can have, we suggest that all affected should seek out counsel from a certified tax professional before filing their taxes.
###
Media Contact:
Lauren Price, USN, (Ret.)
Founder / Managing Director
Veteran Warriors, Inc
4642 Ontario Drive
New Port Richey, FL 34652
Ph: 727.247.8141
Fx: 727-255-5085