Veterans and Surviving Spouses Property Tax Credit

  1. What is the veterans and surviving spouses property tax credit?
  2. Who is eligible for the credit?
  3. How do I obtain verification of my eligibility for the credit?
  4. I did not enter service from Wisconsin, but I have lived in Wisconsin for a long time and meet all other qualifications for the credit. Do I qualify?
  5. I have a 100% service-connected disability rating based on individual unemployability. Do I qualify for the credit?
  6. I am 35 years old and have a 100% service-connected disability rating. Do I qualify for the credit?
  7. I was verified by the WDVA on September 1, as qualifying for the credit for 2013. Can I claim all of the property taxes I paid on my principal residence during 2013 or only the taxes paid after September 1?
  8. I was rated as having a 100% service-connected disability by the federal Veterans Administration (VA) in 2013 and now qualify for the credit. If the VA backdated my claim, may I claim the credit for a prior year?
  9. My spouse was a disabled veteran who did not qualify for the credit for 2008 because he was not age 65 or older. He would have been 65 in January of 2009. My spouse died during 2008 and I have not remarried. May I claim the credit for 2009?
  10. 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?
  11. My spouse and I are both veterans. Both of us qualify for the credit independently of the other. How should we claim the credit?
  12. My spouse and I are both veterans. Each of us qualifies for the credit independently of the other. We jointly own two properties; one is a principal residence and the other is a vacation home. Can my spouse claim the credit for taxes paid on one property and I claim the credit for taxes paid on the other property?
  13. If I am eligible for the credit, is there a limit on the amount of property taxes that can be claimed?
  14. My property tax bill may include charges for other items such as a special assessment for sidewalks, water main replacement, curb/gutter, driveway apron repair/replacement, interest, and charges for services. Can the credit be claimed on the amount paid during the year for these items?
  15. My principal residence is part of a farm. Can I use the entire amount of my property taxes for the credit?
  16. I own a duplex. I live in one-half of the duplex and rent the other half. Can I claim the property taxes on the entire duplex for the credit?
  17. I was verified by WDVA for the credit in 2010. I sold my home in 2013. Can I still claim the credit for 2013?
  18. I am a disabled veteran and qualify for the credit. How does the credit apply if I have a state income tax liability?
  19. 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?
  20. Is there a deadline for claiming the credit?
  21. What do I have to attach to my Wisconsin income tax return when claiming the credit?
  22. 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?
  23. I had a 100 percent disability rating and qualified for the veterans and surviving spouses property tax credit for 2011 and 2012. My disability rating was reduced on June 1, 2013, and I no longer qualify for the credit. Can I claim the credit on my 2013 Wisconsin income tax return?
  24. I am a disabled veteran and qualify for the credit. May I claim the credit if my principal residence has been transferred to a trust?
  25. I have a life estate in property that I use as my principal residence. May I claim the credit based on the life estate?

  1. What is the veterans and surviving spouses property tax credit?

    The veterans and surviving spouses property tax credit is a credit equal to the amount of property taxes paid during the year on an eligible veteran's or surviving spouse's principal dwelling. The credit is claimed on the Wisconsin income tax return. Before claiming the credit, the veteran or surviving spouse must obtain verification of his or her eligibility for the credit from the Wisconsin Department of Veterans Affairs (WDVA). A copy of this verification must be attached to the Wisconsin income tax return for the first year that the credit is claimed.

  2. Who is eligible for the credit?

    The veterans and surviving spouses property tax credit is available to an eligible unremarried surviving spouse or an eligible veteran.

    For taxable years beginning on or after January 1, 2005, and before January 1, 2009:

    An "eligible unremarried surviving spouse" means an unremarried surviving spouse of one of the following, as verified by the WDVA:

    • An individual who had served on active duty in the U.S. armed forces or in forces incorporated as part of the U.S. armed forces, who was a resident of Wisconsin at the time of entry into that active service, and who died on active duty while a resident of Wisconsin.
    • An individual who had served on active duty under honorable conditions in the U.S. armed forces or in forces incorporated as part of the U.S. armed forces; who was a resident of Wisconsin at the time of entry into that active service; who was at least 65 years of age at the time of his or her death or would have been 65 years of age at the close of the year in which the death occurred; who was a resident of Wisconsin at the time of his or her death; and who had a service-connected disability rating of 100% under 38 USC 1114 or 1134.
    • An individual who had served in the National Guard or a reserve component of the U.S. armed forces, who was a resident of Wisconsin at the time of entry into that service, and who, while a resident of Wisconsin, died in the line of duty while on active or inactive duty for training purposes.

    An "eligible veteran" means an individual who is at least 65 years of age and who is verified by the WDVA as meeting all of the following conditions:

    • Served on active duty under honorable conditions in the U.S. armed forces or in forces incorporated in the U.S. armed forces.
    • Was a resident of Wisconsin at the time of entry into that active service.
    • Is currently a resident of Wisconsin for purposes of receiving veterans benefits under ch. 45, Wis. Stats.
    • Has a service-connected disability rating of 100% under 38 USC 1114 or 1134.

    For taxable years beginning on or after January 1, 2009:

    • The definitions of an "eligible unremarried surviving spouse" and an "eligible veteran" are expanded to include an individual or the surviving spouse of an individual who had been a resident of Wisconsin for any consecutive 5-year period after entry into active duty.
    • To qualify for the credit, a veteran must have either a service-connected disability rating of 100 percent under 38 USC 1114 or 1134 or a 100% disability rating based on individual unemployability. "Individual unemployability" means a condition under which a veteran has a service-connected disability rating of either 60% under 38 USC 1114 or 1134 or two or more service connected disability conditions where one condition has at least a 40% scheduler rating and the combined scheduler rating for all conditions is at least 70%, and has an administrative adjustment added to his or her service-connected disability, due to individual unemployability, such that the federal Department of Veterans Affairs rates the veteran 100% disabled.
    • The requirement that the veteran be at least 65 years of age (or was at least 65 years of age at the time of his or her death) is eliminated.
  3. How do I obtain verification of my eligibility for the credit?

    You must obtain verification of your eligibility from the WDVA. Information, instructions and the request form are available from the WDVA website at: dva.state.wi.us. Information and forms are also available from your county veterans service officer. After verifying the information, DVA will issue you a certificate verifying your eligibility. This verification must be attached to your Wisconsin income tax return for the first year for which you are claiming the credit.

  4. I did not enter service from Wisconsin, but I have lived in Wisconsin for a long time and meet all other qualifications for the credit. Do I qualify?

    For taxable years beginning on or after January 1, 2009, you may qualify for the credit if you were a resident of Wisconsin for at least five consecutive years at any time following entry into active duty military service in the U.S. armed forces or forces incorporated in the U.S. armed forces. You must be able to verify your resident status with the WDVA. You do not qualify for the credit for taxable years beginning prior to January 1, 2009. The law in effect for prior years required that you were a resident of Wisconsin at the time of entry into active service.

  5. I have a 100% service-connected disability rating based on individual unemployability. Do I qualify for the credit?

    If you meet all other conditions, you may be able to qualify for the credit for taxable years beginning on or after January 1, 2009. You do not qualify for the credit for taxable years beginning prior to January 1, 2009. The law in effect for prior years required that you had a service-connected disability rating of 100% under 38 USC 1114 or 1134. Individual unemployability was not considered. The WDVA will determine eligibility after reviewing the information submitted to them.

  6. I am 35 years old and have a 100% service-connected disability rating. Do I qualify for the credit?

    If you meet all other conditions, you would qualify for the credit for taxable years beginning on or after January 1, 2009. You do not qualify for the credit for taxable years beginning prior to January 1, 2009. The law in effect for prior years required that you had to be 65 years of age or over to qualify.

  7. I was verified by the WDVA on September 1, as qualifying for the credit for 2013. Can I claim all of the property taxes I paid on my principal residence during 2013 or only the taxes paid after September 1?

    You may claim all property taxes paid on your principal residence during 2013. This includes property taxes on the principal residence and the land surrounding it, but not to exceed one acre, that is reasonably necessary for use of the residence as a principal residence.

  8. I was rated as having a 100% service-connected disability by the federal Veterans Administration (VA) in 2013 and now qualify for the credit. If the VA backdated my claim, may I claim the credit for a prior year?

    The WDVA must determine your eligibility for prior years. If the VA disability rating is backdated, you may not claim the credit for a year prior to 2009 if the rating is based on "individual unemployability." If the disability rating is based on a service-connected disability rating of 100% under 38 USC 1114 or 1134, you may claim the credit for 2009 or any year prior to 2009 in which you were 65 years of age or older.

    If the WDVA verified your eligibility for a prior year, you may claim the credit on an amended return. Amended returns are filed on Form 1X. Amended returns must be filed within four years of the original due date of the return. For example, an amended return for 2009 (originally due April 15, 2010) must be filed on or before April 15, 2014.

  9. My spouse was a disabled veteran who did not qualify for the credit for 2008 because he was not age 65 or older. He would have been 65 in January of 2009. My spouse died during 2008 and I have not remarried. May I claim the credit for 2009?

    Yes, you may claim the credit for 2009 and thereafter as long as you remain unmarried. The WDVA must verify your eligibility for the credit.

  10. 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?

    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.

  11. My spouse and I are both veterans. Both of us qualify for the credit independently of the other. How should we claim the credit?

    You may claim the credit on a joint return or on separate returns. Assuming you reside in the same principal residence, on a joint return you claim a credit for the amount of property taxes paid on that principal residence during the year and the land surrounding it, but not to exceed one acre, that is reasonably necessary for the use of the residence as a principal residence. If you file separate returns and the property is owned by the spouses as joint tenants or tenants in common or as marital property, each spouse may claim the credit based on his or her ownership percentage (generally one-half).

  12. My spouse and I are both veterans. Each of us qualifies for the credit independently of the other. We jointly own two properties; one is a principal residence and the other is a vacation home. Can my spouse claim the credit for taxes paid on one property and I claim the credit for taxes paid on the other property?

    No credit is available for taxes paid on a vacation home. The credit may only be claimed for taxes paid on the principal residence.

  13. If I am eligible for the credit, is there a limit on the amount of property taxes that can be claimed?

    The credit is based on property taxes paid on the principal residence during the year and the land surrounding it, but not to exceed one acre, that is reasonably necessary for the use of the residence as a principal residence. There is no limit on the amount that may be claimed.

    The taxes may be prior year taxes or current year taxes. The only requirement is that they were paid during the year for which the credit is claimed and that the property was your principal residence.

  14. My property tax bill may include charges for other items such as a special assessment for sidewalks, water main replacement, curb/gutter, driveway apron repair/replacement, interest, and charges for services. Can the credit be claimed on the amount paid during the year for these items?

    No. The credit is based only on property taxes paid on the principal residence, exclusive of special assessments, delinquent interest, and charges for service.

  15. My principal residence is part of a farm. Can I use the entire amount of my property taxes for the credit?

    No. You can use only the portion of your property taxes that are allocable to your principal residence and the land surrounding it, but not to exceed one acre, that is reasonably necessary for the use of the residence as a principal residence. The portion of the property taxes that is properly includable as a trade or business expense cannot be used for the credit.

  16. I own a duplex. I live in one-half of the duplex and rent the other half. Can I claim the property taxes on the entire duplex for the credit?

    No. You may use only the portion of the property taxes that is allocable to the portion of the duplex that is your principal residence. For example, if both halves of the duplex are of equal size, you may use one-half of the property taxes paid on the duplex during the year for the credit.

  17. I was verified by WDVA for the credit in 2010. I sold my home in 2013. Can I still claim the credit for 2013?

    Yes. If you sold your principal residence during the year, the "property taxes" for the seller and buyer are the amount of the taxes prorated to each in the closing agreement pertaining to the sale. If the taxes are not prorated in the closing agreement, the tax is to be prorated between the seller and buyer in proportion to months of their respective ownership.

  18. 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.

  19. 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 must be filed on Form 1X. An amended return must be filed within four years of the original due date of the return. For example, a return for 2009 was due April 15, 2010. Amended 2009 returns must be filed on or before April 15, 2014.

  20. 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 2009 Wisconsin income tax return was due April 15, 2010. The 2009 veterans and surviving spouses property tax credit must be claimed by April 15, 2014.

  21. 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. A copy of the verification must be attached only to the return for the first year for which you are claiming the credit.

  22. 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?

    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 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 2013. 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 2014. You deducted the $3,000 as a federal itemized deduction on your 2013 Schedule A. Your total itemized deductions were $8,000. Your federal standard deduction for 2013 would have been $5,950. Therefore, your tax benefit from the itemized deductions was $2,050 ($8,000 less $5,950). The $2,050 must be reported as income on your 2014 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 $10,000 for 2013. Your tax benefit from the itemized deductions was $4,050 ($10,000 less $5,950). The entire $3,000 must be reported as income on your 2014 federal income tax return as a recovery of an itemized deduction.

    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 or 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.

  23. I had a 100 percent disability rating and qualified for the veterans and surviving spouses property tax credit for 2011 and 2012. My disability rating was reduced on June 1, 2013, and I no longer qualify for the credit. Can I claim the credit on my 2013 Wisconsin income tax return?

    Yes, you may claim the credit on your 2013 Wisconsin income tax return based on property taxes you paid on your principal residence during the period January 1 through May 31, 2013. Taxes paid on your principal residence after May 31, 2013, cannot be claimed for the veterans and surviving spouses property tax credit.

  24. I am a disabled veteran and qualify for the credit. May I claim the credit if my principal residence has been transferred to a trust?

    There are two broad classifications of trusts, (1) "testamentary" and (2) "inter vivos" or "living." A living trust may be either "revocable" or "irrevocable." Title to property in a trust is held by the trust, not by the beneficiary. If a qualified veteran holds a life estate in the property, the veteran may claim the real estate taxes paid by the veteran for the veterans and surviving spouses property tax credit. If the veteran created the trust and reserved the right to revoke the trust, the veteran may claim the real estate taxes paid by the veteran for the credit.

  25. I have a life estate in property that I use as my principal residence. May I claim the credit based on the life estate?

    Yes, if you are an eligible veteran or an eligible unremarried surviving spouse and have a life estate in the property used as your principal residence, you may claim the credit based on the amount of property taxes you paid on that property.

    The life estate must be in writing and incorporated in the warranty deed or other legal document. It must be signed and dated by both the person allowing the life estate and the person receiving it. If the property tax bill does not show your name as having a life estate, you must submit a copy of the document showing the life estate, in addition to a copy of the property tax bill and proof of your payment.

    Example:

    A disabled veteran and his son reside in the same home. Prior to the year of the claim, the veteran transferred the property to his son by quit claim deed but retained a life estate in the property. The veteran pays the property taxes, but the property tax bill comes in the son's name.

    If otherwise qualified, the veteran may file a claim for the veteran's and surviving spouses property tax credit based on the amount of property taxes paid by the veteran during the year. The veteran must include a copy of the life estate, the property tax bill, and proof of payment with his return.

FOR MORE INFORMATION PLEASE CONTACT:

WISCONSIN DEPARTMENT OF REVENUE
Customer Service Bureau
PO Box 8949
Madison, WI 53708-8949
Phone: (608) 266-2486
Fax: (608) 267-1030
Email: DORIncome@revenue.wi.gov

Page last updated October 24, 2013