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I was rated as having a 100% service-connected disability by the federal Veterans Administration (VA) in 2023 and now qualify for the credit. If the VA backdated my claim, may I claim the credit for a prior year?
The Wisconsin Department of Veterans Affairs (WDVA) must determine your eligibility for prior years.
If the WDVA verified your eligibility for a prior year, you may claim the credit on an amended return. Amended returns are filed on the same form on which your original return was filed (for example, Form 1 or Form 1NPR). Amended returns must be filed within four years of the original due date of the return.
Note: If you are amending a prior year return to claim the veterans and surviving spouses property tax credit, you must also remove any school property tax credit, homestead credit, or farmland preservation credit claimed for that prior year. You cannot claim these credits if you are claiming the veterans and surviving spouses property tax credit.
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I submitted a disability claim to the United States Department of Veterans Administration (USDVA), for which a decision has not yet been made. If the disability is backdated, how do I claim the credit on prior year returns?
The credit must be claimed within four years of the unextended due date of the Wisconsin income tax return. While the decision is pending with the USDVA, you may request an extension of time to file a return to claim the tax credit if the deadline for claiming the credit is approaching and USDVA is reviewing your eligibility for that year. You must provide the following information with your request:
- Full name
- Residential mailing address
- SSN or ITIN
- Date eligibility determination requested from USDVA
- Tax years applicable to eligibility determination
Send your request to, or contact DOR with questions at:
Email:
DORIncome@wisconsin.gov Call: (608) 266-2486
Write: MS 5-144
Wisconsin Department of Revenue
Attn: Veteran's Credit
PO Box 8906
Madison, WI 53708-8906
For additional information, see
Fact Sheet 1122,
Veterans and Surviving Spouses Property Tax Credit Verification of Eligibility – Extension of Time to Claim Credit.
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My spouse was a disabled veteran who qualified for the credit. My spouse died during the year. I am now the unremarried surviving spouse. How do I claim the credit in future years?
You must first contact the WDVA to obtain verification of your eligibility for the credit. After you receive the verification, you claim the credit on your Wisconsin income tax return. You must attach a copy of the verification to your return for the first year you are eligible for the credit. The verification is not required to be submitted with the return in subsequent years unless your eligibility changes.
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I am a disabled veteran and qualify for the credit. How does the credit apply if I have a state income tax liability?
The credit will first be applied against any state income tax liability. It will then be applied against any delinquent state and federal taxes, debts owed to other state agencies (for example, delinquent child support), and debts owed to municipalities, if any. Any excess amount will then be refunded.
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I just found out about the credit and would have been eligible to claim it before this year. Can I claim the credit for one or more prior years? How far back can I claim the credit and how do I claim it?
You must first contact the WDVA for verification of your eligibility. If you are eligible to claim the credit for one or more prior years for which you have already filed a Wisconsin income tax return, you may file an amended Wisconsin return to claim the credit. Amended returns are filed on the same form on which your original return was filed (for example, Form 1 or Form 1NPR). An amended return must be filed within four years of the original due date of the return.
Note: If you are amending a prior year return to claim the veterans and surviving spouses property tax credit, you must also remove any school property tax credit, homestead credit, or farmland preservation credit claimed for that prior year. You cannot claim these credits if you are claiming the veterans and surviving spouses property tax credit.
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Is there a deadline for claiming the credit?
The veterans and surviving spouses property tax credit must be claimed within four years of the unextended due date of the Wisconsin income tax return. For example, the 2021 Wisconsin income tax return was due April 15, 2022. The 2021 veterans and surviving spouses property tax credit must be claimed by April 15, 2025.
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What do I have to attach to my Wisconsin income tax return when claiming the credit?
When claiming the veterans and surviving spouses property tax credit on the Wisconsin income tax return, you must attach to your income tax return a copy of the verification of your eligibility that you receive from the Wisconsin DVA and a copy of your property tax bills showing the amount of taxes paid during the year and proof of payment. A copy of the verification must be attached only to the return for the first year for which you are claiming the credit. The verification is not required to be submitted with the return in subsequent years unless your eligibility changes.
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Is the amount of my veterans and surviving spouses property tax credit taxable on my income tax return for the year in which I receive it?
The taxability of the amount of the credit depends on the federal or Wisconsin treatment, which is detailed below.
Federal treatment:
The amount of the credit may be taxable for federal income tax purposes. The credit is considered a refund of property taxes (real estate taxes).
If you itemized deductions for federal tax purposes on federal Schedule A and claimed a deduction for the amount of real estate taxes paid, the amount of veterans and surviving spouses property tax credit received during the year is taxable on your federal income tax return to the extent you received a tax benefit from the deduction.
If you did not itemize deductions for federal tax purposes, the amount of veterans and surviving spouses property tax credit received during the year is not taxable on your federal income tax return.
Example 1:
You paid real estate taxes of $3,000 on your principal residence in 2023. You claimed the veterans and surviving spouses property tax credit of $3,000 which was refunded to you when you filed your Wisconsin income tax return in 2024. You deducted the $3,000 as a federal itemized deduction on your 2023 federal Schedule A. Your total itemized deductions were $15,650. Your federal standard deduction for 2023 would have been $13,850. Therefore, your tax benefit from the itemized deductions was $1,800 ($15,650 less $13,850). The $1,800 must be reported as income on your 2024 federal income tax return as a recovery of an itemized deduction.
Example 2:
The facts are the same as in Example 1 except that your total itemized deductions were $18,500 for 2023. Your tax benefit from the itemized deductions was $4,650 ($18,500 less $13,850). The entire $3,000 must be reported as income on your 2024 federal income tax return as a recovery of an itemized deduction.
Note: Use Worksheet 2 in federal
Publication 525,
Taxable and Nontaxable Income, to determine the taxable amount of your veterans and surviving spouses property tax credit. Contact the federal Internal Revenue Service (IRS) if you have questions about the federal treatment of the credit. The IRS toll–free number is 1–800–829–1040.
Wisconsin treatment:
The amount of the veterans and surviving spouses property tax credit is not income on your Wisconsin income tax return. Wisconsin law allows a subtraction from federal adjusted gross income for any amounts that are recoveries of federal itemized deductions for which no tax benefit was received. Because no deduction has been allowed for property taxes and the property taxes cannot be used in the computation of the Wisconsin itemized deduction credit, no tax benefit was received for Wisconsin income tax purposes.
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I had a 100% disability rating and qualified for the veterans and surviving spouses property tax credit for 2021 and 2022. My disability rating was reduced on June 1, 2023, and I no longer qualify for the credit. Can I claim the credit on my 2023 Wisconsin income tax return?
Yes, you may claim the credit on your 2023 Wisconsin income tax return based on property taxes you paid on your principal residence during the period January 1 through May 31, 2023. Taxes paid on your principal residence after May 31, 2023, cannot be claimed for the veterans and surviving spouses property tax credit.
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May the personal representative claim the veterans and surviving spouses property tax credit on a decedent's final individual income tax return?
If the property tax payments were paid to the municipality before the date of death, then the credit may be claimed on the decedent's final individual income tax return, assuming they otherwise qualified for the credit. If the property tax payments were paid to the municipality after the date of death and there is no eligible unremarried surviving spouse, the credit may not be claimed on the decedent's final individual income tax return. The property tax payments paid after death may be reported as a property tax expense on the decedent's federal Form 1041,
U.S. Income Tax Return for Estates and Trusts. See the Form 1041 instructions available at
www.irs.gov.