Is VSI and SSB taxable income? Yes. Payments received under these programs are subject to federal taxation.

What is military VSI?

Voluntary Separation Incentive (VSI) is an early retirement benefit that may be offered to military members whose careers are not advancing. The voluntary Separation Incentive is a periodic payment while Special Separation Benefits (SSB) is a lump sum payment.

How is military separation pay calculated?

It is calculated by multiplying monthly base pay x 12 x 10% x years of service. Half Involuntary Separation Pay is half of full Involuntary Separation Pay, and can be given to veterans who have an honorable or general discharge.

Do you get paid more if your married military?

Military members receive extra pay when they are married. It won’t give you “military marriage pay,” but it does the next best thing. It gives servicemembers more of a housing allowance when they add a dependent, and yes, a spouse is considered a dependent. It offers a few other perks as well.

What is a VSI payment?

VSI/SSB Recoupment If you receive Voluntary Separation Incentive (VSI) or Special Separation Bonus (SSB) and later qualify for retired or retainer pay, you will be required to repay the full gross VSI/SSB paid to date. You will receive a notification letter 90 days before your recoupment begins.

What is VSI and SSB?

Some servicemembers left military service by taking Voluntary Separation Incentive (VSI) pay or Special Separation Bonus (SSB) pay and later returned to military duty and qualified for either an active duty or reserve component retirement. Retired members may apply for a hardship reduction in the amount recouped.

What is VSI military?

Why does the VA recoup separation pay?

A. In some cases, members entitled to disability retired pay will also qualify for the VA disability compensation. In such cases, the amount deducted to recoup the separation payment by the VA will reduce the gross amount of separation, severance or readjustment pay to be recouped by DoD.

Do I have to pay back separation pay?

If you agree to an ISP and later start receiving VA disability payments, you must pay back all your separation pay. This applies to both full and half-pay arrangements. It does not matter how much the VA pays you for your disability(s). You have to payback ISP whether the VA rates you at 10% or 100%.

How is VA compensation deducted from VSI pay?

Additionally, VA compensation is deducted from VSI. If the VA is also recouping SSB payments, we will coordinate with them to avoid over-collection. We deduct your VA award from your gross retired pay, and then withhold 40 percent of that amount for recoupment purposes.

How much do you have to pay back for VSI?

The payback rate is 40% of your monthly check. Lump-sum repayments are not allowed. If you want to pay this money back faster, you will need to send a signed, written request to increase your monthly payments. If you received VSI and you have completed your term in a Reserve Component, the government won’t recoup any money.

Is the Department of Veterans Affairs recouping VSI?

The Department of Veterans Affairs (VA) does not recoup VSI, but will recoup SSB. Additionally, VA compensation is deducted from VSI. If the VA is also recouping SSB payments, we will coordinate with them to avoid over-collection.

Do you get your SSB back from VSI?

The government deducts VA compensation from VSI. The VA does not recoup VSI but will recoup SSB. The government can’t change any previous 1099R forms. Nor can they give you back the taxes paid on this money, so they will treat the recoupment payments as a pre-tax deduction.