TDIU Severed Because of Employment: Challenging the Decision
What the severance decision had to establish
- Actual employability shown by clear and convincing evidence — not a snapshot improvement on one exam. 38 CFR § 3.343(c).
- If the rating was reduced solely because you started working: employment maintained for 12 consecutive months. A shorter stretch, or a job you already lost, does not meet the rule.
- Substantially gainful work — earnings above the Census poverty threshold for one person, outside a protected environment such as a family business or sheltered workshop. 38 CFR § 4.16(a).
- Proper proposal procedure first: written notice, 60 days to submit evidence, 30 days to request a hearing. 38 CFR § 3.105(e), (i).
The income question — what was actually reported
Most employment-based severances start with an IRS or SSA data match. The number VA saw is not necessarily wages from current work: severance payouts, disability or retirement payments, accrued-leave cash-outs, a spouse's income on a joint return, and one-time contract payments all surface in the same data.
If the figure VA relied on was not substantially gainful earnings, the severance rests on a false premise. Tax returns, pay stubs, and a written explanation of what the deposit actually was are the core evidence on review.
The employment question — what the job actually was
Even real wages can be marginal employment. Earnings at or below the poverty threshold are marginal by regulation, and work in a protected environment — a family business that tolerates absences and accommodations no competitive employer would, or a sheltered workshop — counts as marginal regardless of what it pays.
Evidence of a protected environment is concrete: who the employer is, what accommodations were made, how many hours were actually worked, how often you were absent, and why the arrangement ended. Employer statements and coworker lay statements carry this.
Which review lane fits
- — the record already contains what VA needed (the job ended before 12 months, the income was misread) and the error is in how the rules were applied. No new evidence allowed.
- — you have new and relevant evidence: employment records, an employer statement about accommodations, tax documents showing what the income actually was.
- — the dispute is legal or factual judgment best argued to a , or earlier lanes failed.
- motion — the severance is final, the record was complete, and VA misapplied § 3.343(c) or § 4.16 in a way that changed the outcome. Narrow, but it reaches back to the original when it succeeds.
While the challenge is pending
A finalized severance stops the -rate payment, but the underlying schedular ratings continue. Re-check the on its own — some veterans at severed TDIU are still owed or a higher schedular combination that nobody evaluated.
Do not re-file a brand-new application to replace the challenge. A new restarts the clock at today's date; a successful challenge to the severance restores the rating — and the back pay — from the severance date. The two paths can run together, but the challenge is what protects the retro.
Fee rules
An accredited agent or attorney may charge a fee only for work performed after VA issues a decision on the (38 U.S.C. § 5904(c)(1); 38 CFR § 14.636(c)). Fees must be reasonable, disclosed in writing, and filed with VA. Nothing here predicts an outcome in any individual case.
Check this against your own paperwork
| If your record shows this | What it means |
|---|---|
| The decision says you 'returned to work' but the job lasted six months and ended | § 3.343(c) requires 12 consecutive months when the rating was reduced solely for starting work. A shorter, failed attempt does not qualify. |
| The income VA cites is a severance payout, disability retirement, or your spouse's wages on a joint return | That is not substantially gainful earnings from your current work. The premise of the severance is attackable with tax and payroll records. |
| You worked for a relative's business that excused absences and let you set your own hours | Protected-environment employment is marginal under § 4.16(a) regardless of pay. Employer and coworker statements document it. |
| Your gross earnings were below the one-person poverty threshold | Marginal employment by regulation. Verify which year VA used and the threshold for that year. |
| You never received a proposal letter before the payments stopped | § 3.105(e) requires a written proposal and response windows before reduction. A severance without it is procedurally defective. |
| The decision mentions an employer questionnaire you never saw | Notice problems cut both ways — VA's file may rely on documents never properly furnished to you. Get the claims file before choosing a lane. |
Every one of these signals describes a finalized VA decision — the posture where accredited representation can formally engage and a fee may be charged under 38 CFR § 14.636.
Frequently Asked Questions
References & sources
- 38 CFR § 3.105 — Revision of decisions (reduction and severance procedure) — Code of Federal Regulations
- 38 CFR § 3.343 — Continuance of total disability ratings — Code of Federal Regulations
- 38 CFR § 3.344 — Stabilization of disability evaluations — Code of Federal Regulations
- 38 CFR § 3.951 — Preservation of disability ratings — Code of Federal Regulations
- 38 CFR § 3.957 — Service connection protected after 10 years — Code of Federal Regulations
- 38 CFR § 3.327 — Reexaminations — Code of Federal Regulations
Useful Tools & Topics
Have questions about your specific case?
Every veteran's facts are different. A free initial consultation with a VA-Accredited Claims Agent can tell you whether your matter is a fit for representation — and what the right next step looks like either way.
Disclaimer: This page is for educational purposes only and does not constitute legal advice. Oakridge Claims is a private business and is not affiliated with, endorsed by, or operated by the U.S. Department of Veterans Affairs. No guarantees of outcomes are made. Each claim is decided on its individual facts.
Related guides
Severance of Service Connection
The clear-and-unmistakable-error standard VA must meet under 38 CFR § 3.105(d), the 10-year protection in § 3.957, and how a severance proposal is answered.
Protected Ratings: The 5, 10, and 20-Year Rules
Which protections attach automatically with time — stabilized ratings, protected service connection, and continuously rated evaluations under § 3.951(b).
Notice of Disagreement (Legacy vs. AMA)
How NODs work under the old legacy system, the AMA decision-review system, and which veterans still file them today.
VA Form 21-8940: TDIU Application
Line-by-line walkthrough of VA Form 21-8940 — employment history, earnings, education, and the substantially gainful employment standard for TDIU under 38 CFR § 4.16.