Combat-Related Special Compensation
At Hill & Ponton, we are often asked questions about different types of compensation and pension. While our firm does not handle military or VA pension matters, it is still beneficial for veterans to be aware of other types of compensation that are available to them under certain circumstances. This post is going to discuss Combat-Related Special Compensation (CSRC).
Veterans who are eligible for military retired pay have had a long struggle with the VA to receive both military and VA benefits. In the past, the VA would not allow veterans to receive full military retirement benefits in addition to VA disability compensation. Now, retiree veterans can receive full retire pay and full VA benefits thanks to the Combat-Related Special Compensation program (10 U.S.C. § 1414) under the following conditions:
- Retiree veterans with at least 20 years of service, and who have 100% s/c schedular rating, are entitled to receive their entire military retirement payment as well as their entire VA benefits (concurrent receipt)
- Retiree veterans with at least 20 years of service, and who are rated totally disabled due to individual unemployability (TDIU), are entitled to receive their entire military retirement payment as well as their entire VA benefits (concurrent receipt)
- Retiree veterans with at least 20 years of service, and who have s/c disabilities rated between 50-90%, are entitled to receive their entire military retirement payment as well as their entire VA benefits (concurrent receipt), starting December 31, 2013 after the initial phase-in.
- Veterans who were medically discharged under Chapter 61 and have a VA disability rating of at least 10% for a combat-related disability (ies) may be entitled to concurrent receipt of part of their military medical retirement pay and VA compensation for the disability, regardless of the number of years served.
So now the big question: is CRSC taxable? The answer is: No. The Armed Forces Tax Council (AFTC) determined that all CSRC payments are exempt from Federal Income Tax under section 104 of title 26, United States Code. This is incredibly beneficial because qualified veterans (under CRSC) can receive special compensation and VA disability pay, both being tax-free.
Note: There is another type of special compensation, Concurrent Retirement and Disability Payment program (CRDP), that is issued by the Department of Defense and that is subject to taxation.
Unlike VA disability compensation, CRSC terminates on death, and therefore survivors are not entitled to this benefits after the veteran’s death. However, if the veteran had applied for CRSC before his death, and was awarded after his death, the retiree’s estate is entitled to the CRSC benefits that would have been paid from the approved effective date to the date of the retiree’s death.
Further Qualifications for CRSC
In order to qualify for CRSC, the retiree veteran must have a disability(ies) that has been service-connected by the VA at 10% or more. In addition, the disability(ies) must be combat-related. In order to be considered as “combat-related”, qualifying disabilities would have had to be the result of one of the following:
- Direct result of armed conflict
- Instrumentality of war
- Performance of duty under conditions simulating war
- Engagement in hazardous service