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The US government provides many tax benefits and deductions to injured veterans. As you choose how to take advantage of the various alternatives, follow this guide to guarantee you receive the rewards you deserve.

To thank you for your service, the United States offers multiple tax breaks for disabled veterans. Here are the qualifications for each and how they may apply to your current situation.

How Tax Breaks for Disabled Veterans Work

Tax benefits for disabled veterans aren’t usually applied as a tax credit or tax deduction on your federal income tax return. Instead, they’re typically spread out over different areas and may work in different ways.

Tax breaks depend partly on where you live

The tax breaks you qualify for often depend on where you live in the United States. While there are some tax breaks at the federal income tax level, other tax breaks may vary from state to state.

For instance, property tax exemptions often exist for disabled veterans who are also homeowners.

  • Each state has its own rules for who qualifies for a property tax exemption and how much that exemption is.
  • These exemptions won’t show up on your state income tax return, though. They’ll show up on your property tax bill.

Some of these tax breaks may only apply if you have a certain level of service-related disability.

For example, Florida uses this measure when deciding property tax exemptions:

  • A veteran with at least a 10% service-related disability may get a $5,000 property tax exemption.
  • Meanwhile, a 100% service-related disabled veteran may get a full property tax exemption.

Indiana’s property tax exemption takes things one step further with both a disability requirement and an age requirement:

  • If you’re under 62, you must have a 100% service-related disability rating and served honorably during any period of wartime to get a $24,960 deduction form the assessed value of the property.
  • If you’re 62 or older, you only have to have at least a 10% service-related disability to get the benefit.

Applying for tax breaks

While each state is different, property tax exemptions may require you to file paperwork to claim them. You can get in touch with the agency that sends property tax bills to find out who you need to speak with. Then, you can discover what you need to do to get any applicable disabled veteran exemptions added to your account. Once you have that information, you’ll want to get the exemption applied to your account as soon as possible.

Certain tax breaks apply automatically

In some cases, you may not have to file any paperwork or claim a deduction or tax break on your tax return. Certain tax breaks automatically apply.

One example is disability benefits received from the Department of Veterans Affairs. These benefits should not be included in your gross income, so they shouldn’t be taxed.

Non-taxed disability benefits include:

  • Disability compensation which are paid to either veterans or their families
  • Grants for vehicles for veterans who lost the use of their limbs or their sight, or homes designed for wheelchair living
  • Benefits under dependent-care assistance programs

If you accidentally claimed some of this income as taxable on your federal tax return, continue reading to see how you might get a refund. This requires filing an amended tax return, which TurboTax can help with.

You may need to file a tax return

Certain disability deductions or exemptions require filing a tax return. If your state’s income tax offers benefits, they may require filing a state return to claim those benefits. However, you sometimes have to file a federal tax return to get a benefit, too.

If the Department of Veterans Affairs determines that your percentage of disability has increased, you might be able to get a federal income tax refund by filing an amended tax return.  Normally, the income is correctly reported as taxable or non-taxable on the applicable tax forms you receive, based on your disability status. When you file your tax return with TurboTax, you’ll simply enter the information from these forms, and the program will then treat the income as either taxable or non-taxable.

When that status changes for a previous year after you’ve filed a return for that year, your previous tax returns don’t automatically correct themselves.

  • Instead, you’ll need to go back and adjust previous tax returns to reflect your new disability percentage properly.
  • Amending those returns with your new, higher disability percentage could result in a refund.
  • This may also be applicable to combat-disabled veterans who apply for and are granted combat-related special compensation after they receive an award for concurrent retirement and disability.

If you’re confused about how to file an amended tax return, TurboTax can walk you through the necessary steps to help you complete the proper forms and file the amended return.

You may also qualify for general disability tax breaks

As a veteran, you may also be eligible for other non-veteran-based disability tax breaks, such as:

  • The Tax Credit for the Elderly and Disabled
  • The Child and Dependent Care Credit, if you’re married and you and your spouse paid someone to help take care of you.

Veterans Benefits from the State of Texas

There are a number of State of Texas benefit programs to which veterans may be entitled. The following is a brief description of the primary programs. Contact the Tarrant County Veteran Services Office at 817-531-5645 if you have any questions.

Property Tax Exemption

Disabled veterans who meet certain requirements, their surviving spouses and the spouses and minor children of a person who dies on active duty in the U. S. Armed Forces are eligible for property tax exemptions on the appraised value of their property. The exemption is mandatory and applies to taxes levied by all taxing authorities in the state.

Read Also: How to Pay Tax on Your Brokerage Account?

A veteran, whose service-connected disabilities are rated less than 10 percent by the Department of Veteran Affairs (DVA), or a branch of the Armed Forces, is not entitled to property tax exemption. You will need a letter from the Department of Veteran Affairs showing your current disability rating. Contact the DVA at 800-827-1000 to get this letter. The appraisal district will not take your DVA award letter. You will also need your discharge document. Contact the Tarrant Appraisal District at 817-284-0024 for more information also view the Tarrant Appraisal District website

Disabled Veterans License Plates and Parking Placards

You may apply for Disabled Veteran license plates for your car, light truck or motorcycle if you are certified by the Department of Veteran Affairs to have a 50 percent or higher service-related disability, or at least 40 percent due to amputation of a lower extremity. An annual $3 fee is collected for the first set of plates but no regular registration fee. You may receive an additional set of plates, but you are required to pay the regular registration fee and other applicable fees.

Persons entitled to license plates for disabled veterans may also elect to receive a standard license plate at the same cost in lieu of the first set of disabled veteran plates. You will need a letter from the Department of Veteran Affairs showing your current disability rating. Contact the DVA at 800-827-1000 to get this letter. You will also need your discharge document. Contact the vehicle registration office for more details at 817-884-1100.  

Parking Privileges for Certain Veterans

When a vehicle with disabled veteran plates is being operated by or for the disabled veteran, the disabled veteran may use any parking space or area that is designated specifically for persons with physical disabilities. Vehicles that display Disabled Veteran, the Air Force Cross, Distinguished Service Cross, Army Distinguished Service Cross, Navy Cross, Pearl Harbor Survivor, Purple Heart, Prisoner of War or Congressional Medal of Honor license plates may park free of charge at a parking meter operated by a governmental authority other than the federal government.

The vehicle must be driven by or for the transportation of the person who registered the vehicle. Other fees for parking garages and lots are governed by local governments which have the option of passing ordinances for the exemption of fees for a disabled veteran. Contact the vehicle registration office for more details at 817-884-1100. Application forms can be obtained by calling the Texas Department of Transportation at 512-374-5010 or by visiting www.dot.state.tx.us. In addition, veterans may park at the DFW airport free of charge. 

Specialty License Plates

Disabled Veteran, Former Prisoner of War, Pearl Harbor Survivor, Purple Heart and Medal of Honor plates are among the special license plates available for personal use on an automobile or light commercial vehicle of one ton or less. Disabled Veterans must have a service-connected disability rating of 50 percent or more, or at least 40 percent due to amputation of a lower extremity. Former military and civilian prisoners of war are eligible if they were captured or incarcerated by an enemy of the U. S. during a period of conflict with the U. S. and were U. S. citizens at the time of capture.

You will need a letter from the Department of Veteran Affairs showing your current disability rating. Contact the DVA at 800-827-1000 to get this letter. You will also need your discharge document. Contact the vehicle registration office for more details at 817-884-1100. For fee schedules and applications, visit www.dot.state.tx.us or call the Texas Department of Transportation office at 512-374-5010. 

Free Drivers License for Disabled Veterans

Texas driver’s licenses may be furnished free of charge to veterans who have service-connected disabilities rated at 60 percent or more by the Department of Veteran Affairs or by a branch of the U. S. Armed Forces. Application must be made prior to the time the present driver’s license expires.

Application forms may be obtained from the Department of Public Safety’s (DPS) license examining offices located throughout the state. Proof of the veteran’s disability rating must accompany the application. Contact the DVA at 1-800-827-1000 to get a letter showing your current disability rating. Contact the DPS Drivers License Office in Fort Worth at 817-294-1075, 6413 Woodway Drive, Ft Worth, TX 76133, for more information. 

Veteran Designation for State of Texas Driver’s Licenses for Disabled Veterans

The Texas Department of Public Safety now offers a veteran designation on the face of driver licenses for qualifying veterans. Veterans must visit a driver’s license office and present an original military discharge document or VA letter showing that they received an honorable discharge or a general discharge under honorable conditions in order to be eligible for the veteran designation. Contact the Texas Department of Public Safety at 512-424-2600 or by visiting the Texas Department of Public Safety website. 

Veterans Employment Services

The Texas Veterans Commission offers employment services to Texas veterans and helps employers find qualified veteran job applicants. Employment representatives offer one-on-one assistance to veterans with job applications and resume preparation, plus job matching and searches. Additional intensive services are provided to disabled veterans and veterans with other barriers to employment — especially homeless veterans. Go to the TVC website to find employment representatives near you. In Fort Worth, there are representatives at the Resource Connection at 817-804-4235, on E. Lancaster at 817-413-2891, and N. Main at 817-804-2664. 

Veteran’s Preference and Military Service Credit (for State of Texas employment)

Veterans have a preference in employment with State agencies or offices, as do widows/widowers and children of those killed on active duty. State agencies must practice veterans’ preference until they have reached 40 percent employment.

Non-retiree veterans who are employed by the State of Texas are entitled to claim their active-duty military time toward retirement, provided they present a proper request and pay to the Employee Retirement System the specified amount of retirement contribution for the time spent in the military. All veterans may also use their military time toward retirement if they are members of the State Teachers Retirement System. Contact the Texas Veterans Commission at 512-463-5538 for more information. 

Home, Land and Home Improvement Loans for Texas Veterans

The Texas Veterans Land Board administers three veterans’ loan programs:  The Land Loan Program, Veterans Housing Loan Program, and the Veterans Home Improvement Loan Program. These programs are especially advantageous for disabled veterans.  

Texas Veterans Cemeteries

The Texas State Cemetery Program provides state-managed perpetual shrines for veterans near family and friends. Currently, the Texas Veterans Land Board operates 4 cemeteries:  the Central Texas State Veterans Cemetery in Killeen; the Rio Grande Valley State Veterans Cemetery in Mission; the Texas State Veterans Cemetery in Abilene; and the Coastal Bend State Cemetery in Corpus Christi. Further information can be obtained by calling the Texas Veterans Land Board at 800-252-8387.

Texas State Veterans Homes

The Texas State Veterans Homes Program offers affordable, long-term nursing care to Texas veterans, their spouses and Gold Star Parents. The homes are located in Amarillo, Big Spring, Bonham, El Paso, Floresville, McAllen, Temple and Tyler. Further information can be obtained by calling the Texas Veterans Land Board at 800-252-8387 or visiting the Texas Veterans Land Board website.

Hazelwood Act Educational Benefits

The Texas Hazelwood Act is an education benefit providing eligible veterans up to 150 credit hours of tuition exemption at a state-supported college or university. To be eligible, a veteran must (1) have been a Texas resident upon entry into the military, entered into active federal duty in the State of Texas, or declared Texas as his or her home of record at the time of entry into the armed forces as documented on his or her military discharge document; (2) have a military discharge of honorable or general, under honorable conditions; and (3) not be in default on a federal education loan or student loan made or guaranteed by the State of Texas. For more information about eligibility for the Hazelwood Act go to website or call the Texas Veterans Commission at 512-463-5538.

Free Recording of Discharges

Under Local Government Code, Sec.192.002, the county clerk in each county is required to record, free of charge, the official discharge of a veteran who served in the U. S. Armed Forces. The veteran must take his or her discharge document to the county clerk to have it filed, at which point the discharge document will become a confidential record for 75 years from the filing date. This free service is very important as it provides veterans with a ready source from which they can obtain a certified copy of their discharge whenever it is needed. Contact the Tarrant County Clerk’s office at 817-884-1550 for this service. 

No Cost Medical Records

Under the Health and Safety Code, Chapter 161, Subchapter M, medical records or mental health records, Texas veterans are eligible for no-cost medical records when they are obtained to file a claim for disability against the Department of Veteran Affairs. The health care provider or health care facility is not required to provide more than one complete record for the patient or former patient without charge. Also, it should be noted, that some medical facilities may charge a small administrative fee for obtaining the records.  

Fishing and Hunting Licenses

A disabled veteran who has a service-connected disability rating of 60 percent or higher, or has the loss of use of a lower extremity, can receive hunting and fishing licenses at a reduced cost. Reduced-cost hunting and fishing licenses can be obtained anywhere such licenses are sold. The veteran must provide proof of the service-connected disability rating at the time of purchase of the license. Call the VA at 800-827-1000 to get a disability rating letter. Contact the Texas Parks and Wildlife Department at 800-792-1112 or visit the Texas Parks and Wildlife website for more information. 

Concealed Handgun License Fees

Concealed handgun license fees for the issuance of an original, duplicate, modified or renewed license is waived for members of the U. S. Armed Forces, including a members of the Reserves, National Guard or State Guard. Fees are also waived for a veteran who, within 365 days preceding the date of application, was honorably discharged from the branch of service in which the person served.

Fees are reduced by 50 percent for a veteran who was honorably discharged from the branch of service in which the person served. Call the VA at 800-827-1000 to get a disability rating letter. Contact the Texas Department of Public Safety at 512-424-7293 for more information. 

State Park Admission

The State Parklands Passport provides free admission to Texas State parks for any veteran who has a service-connected disability rating of 60 percent or higher, or a service-connected disability that resulted in the loss of use of a lower extremity. Application for the State Parklands Passport can be made at the headquarters office of any Texas State Park by providing evidence of the service-connected disability rating.

The State Parklands Passport is available to any veteran who meets the requirements, whether or not the veteran resides in Texas. Veterans will only receive free admission to state parks; the passport does not exempt veterans from payment of other charges, such as camping fees. Call the VA at 800-827-1000 to get a disability rating letter. For more information, contact the Texas Parks and Wildlife Department at 800-792-1112. 

Contract Preferences

All state agencies, when purchasing goods, including agricultural goods, shall give preference to goods produced or offered by a Texas bidder. A Texas bidder that is owned by a service-disabled veteran who is a Texas resident shall be given first preference and goods produced in this state or offered by other Texas bidders shall be given second preference if the cost to the state and quality are equal. Contact the Texas Veterans Commission at 877-898-3833 for more information.

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