IRS Publication 3, Armed Forces Tax Guide, is a free booklet packed with valuable information and tips designed to help service members and their families take advantage of all tax benefits allowed by law. Here are some of those tax benefits.
- Combat pay is partially or fully tax-free. Service members serving in support of a combat zone may also qualify for this exclusion.
- Reservists whose reserve-related duties take them more than 100 miles from home can deduct their unreimbursed travel expenses, even if they don’t itemize their deductions.
- The Earned Income Tax Credit may be worth up to $6,269 for low-and-moderate-income service members. A special computation method is available for those who receive nontaxable combat pay. Choosing to include it in taxable income may boost the EITC, meaning owing less tax or getting a larger refund.
- An IRA or 401(k)-type plan might mean saving for retirement and cutting taxes too. Service members who contribute to a plan, such as the Thrift Savings Plan, may also be able to claim the Retirement Savings Contributions Credit.
- An automatic extension to file a federal income tax return is available to U.S. service members stationed abroad. Also, those serving in a combat zone typically have until 180 days after they leave the combat zone to file and to pay any tax due.
- Both spouses normally must sign a joint income tax return, but if one spouse is absent due to certain military duty or conditions, the other spouse may be able to sign for him or her. A power of attorney is required in other instances. A military installation’s legal office may be able to help.
- Those leaving the military and looking for work may be able to deduct some job search expenses, such as the costs of travel, preparing a resume and job placement agency fees. Moving expenses may also qualify for a tax deduction.
Source: Internal Revenue Service
contact@officetaxservices.com
(858)247-1680
If you are in the U. S. Armed Forces, there are special tax breaks for you.
For example, some types of pay are not taxable. Certain rules apply to
deductions or credits that you may be able to claim that can lower your tax. In
some cases, you may get more time to file your tax return. You may also get
more time to pay your income tax. Here are some tips to keep in mind:
- Deadline
Extensions. Some members of the military, such as those who serve
in a combat
zone, can postpone some tax deadlines. If this applies to you, you can
get automatic extensions of time to file your tax return and to pay your
taxes.
- Combat Pay Exclusion. If you serve in a
combat zone, your combat pay is partially or fully tax-free. If you serve
in support of a combat zone, you may also qualify for this exclusion.
- Moving Expense Deduction. You may be able
to deduct some of your unreimbursed moving costs on Form
3903. This normally applies if the move is due to a permanent change
of station.
- Earned Income Tax Credit
or EITC.
If you get nontaxable combat pay, you may choose to include it in your
taxable income. Including it may boost your EITC, meaning you may owe less
tax and could get a larger refund. In 2015, the maximum credit for
taxpayers was $6,242. The average amount of EITC claimed was more than
$2,400. Figure it both ways and choose the option that best benefits you.
- Signing Joint
Returns. Both spouses normally must sign a joint income tax return. If your spouse
is absent due to certain military duty or conditions, you may be able to
sign for your spouse. You may need a power of attorney to file a
joint return.
- Reservists’ Travel
Deduction.
Reservists whose reserve-related duties take them more than 100 miles away
from home can deduct their unreimbursed travel expenses on Form
2106, even if they do not itemize their deductions.
- Uniform Deduction. You can deduct
the costs of certain uniforms that you can’t wear while off duty. This
includes the costs of purchase and upkeep. You must reduce your deduction
by any allowance you get for these costs.
- ROTC Allowances. Some amounts
paid to ROTC
students in advanced training are not taxable. This applies to
allowances for education and subsistence. Active duty ROTC pay is taxable.
For instance, pay for summer advanced camp is taxable.
- Civilian Life. If you leave the
military and look for work, you may be able to deduct some job search
expenses. You may be able to include the costs of travel, preparing a
resume and job placement agency fees. Moving expenses may also qualify for
a tax deduction.
Source: Internal Revenue Service
contact@officetaxservices.com
(858)247-1680
