So I have a question that I have been trying to figure out but never got a definite answer. I have separated from the military after 15 years, and they gave me a severance package around 50K+. Mind you though minus the taxes I only was able to keep 30K+. The stipulation was if I joined the reserves and retire from them they have to garnish my retirement pay to pay back the severance package. I am now on track retiring in the reserves.
So, when they do garnish my pay. Do I also pay them back for the taxes they took? If you think about it, I only really received 30K+ after taxes, So shouldn't they only garnish 30K+ and not the full 50K+? I mean it's still 20 years away but that's still a lot of money. You can't pay it fully back also in one lump sum, they really have to garnish your retirement pay month after month. Any insights and info on this at all will help. Thanks.
You will be definitely asked to pay back pre tax total amount of $50k. I would recommending reaching out to a attorney or tax consultant who is well versed in the laws the military to weigh your options.
The government will reoup the total severance pay (pre-tax) immediately and in the lump sum if they can. This includes if you get VA disability, comp and pen, etc, etc anything federal. You can ask to have to prorated though. I took a package in 1998 with the big RIF and had it recouped when I started getting VA Disability. You also have to prove that you repaid it. I found that out at a USAR retirement briefing. BTW go to those briefings if you can. 99th RSC has them probably once a month. They answer some really big questions and can answer this one with more up to date info. Things change constantly so you need to stay informed. Hope this helps.
Thanks for your service. i am not an Attorney or Tax person, but more than anything, as far as I am concerned, you should be living a comfortable ex-military life and shouldn't have to worry about paying back taxes already paid out from money owed to you. This situation as explained, definitely sounds off. I suggest you go on Linked In and try to reach out to an Attorney experienced in Military affairs who can offer you free legal advice or Google a Legal Aid location in your area for answers. Wishing you the best!
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