During the Gold Rush, miners would protect their claim to gold mining or panning by staking a claim...literally with a stake. If you have a complicated VA Disability Claim or are waiting on appeal you may want to stake your claim too.
As written about here, you have the right to amend a tax return to account for VA offset that should have been taken from your retired military pay while your claim was being adjudicated. This right was granted as a result of the Strickland Decision and was codified in IRR 78-161.
Under the normal rules you have 3 years from the time you filed your return or two years from the time you paid the tax, whichever is later, to file a claim for a refund. Under a special provision in the tax code pertaining to VA claims, that time can be stretched to four years under rules described here. The problem is that occasionally, the VA takes longer than that amount of time and you may not be able to file an amended return. Unless...
You file a protective claim. You can file a protective claim if:
Your right to a refund is contingent on future events and may not be determinable until after the time for filing a claim for refund expires.
The protective claim preserves your right to claim a refund when the contingency is resolved.
So how do you file a protective claim? A protective claim must:
Be in writing and signed
Include your name, address, social security number and other contact information
Identify and describe the contingencies affecting the claim
Clearly alert the IRS to the essential nature of the claim, and
Identify the specific year(s) for which a refund is sought
Mail the protective claim for refund to the address listed in the instructions for Form 1040X, under Where to File.
You have the right to do this. Make sure you or your financial advisor are aware of this military tax issue.
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