GRAFENWOEHR, Germany -- Just two weeks into the tax season, the tax centers in Grafenwoehr and Vilseck have garnered nearly $170,000 in refunds for its USAG customers and saved them $11,400 in filing fees.
The 7th Army Joint Multinational Training Command tax program has one mission: offer free tax filing services to Soldiers, spouses and Department of Defense civilians, and get them the most money back on their returns.
Below are a series of frequently asked questions so customers can come prepared to their tax center appointment and receive the most profitable refund.
Question: What services are available at the community tax centers?
Answer: The Army tax centers provide free e-filing income tax preparation services for all eligible community individuals. Tax professionals and a legal assistance attorney can provide qualified advice to tax questions, amend tax returns, ensure a maximum refund and assist clients with their tax issues throughout tax season. All e-filers have completed and been certified in the IRS's Volunteer Income Tax Assistance (VITA) program by passing multiple tests and undergoing tax training.
Q: What are major changes that affect my 2012 taxes?
A: This year's Internal Revenue Service tax deadline for filing tax returns is April 17. Taxpayers living in Germany, however, have a two-month extension for an overseas filing deadline of June 15. Moreover, troops in a combat zone have at least 180 days from leaving the combat zone to file their tax returns. If taxpayers owe taxes, they must still pay by April 17 to avoid interest and penalties.
The IRS has increased the standard deduction to $6,100 (single and married filing separately, up from $5,950), $12,200 (married filing jointly or qualified widower, up from $11,900) and $8,500 for head of household, and increased the amount for personal exemptions to $3,900 (up from $3,800).
Q: What should I bring with me to the community tax center?
A: At a minimum, taxpayers must bring their DoD-issued ID card and official documentation of Social Security Numbers, all W-2 forms and, if seeking an electronic refund, bank account and routing numbers or a cancelled check. Taxpayers must also bring other relevant documents for their own individual tax situations, including:
- Form 1099-INT (interest statements), 1099-DIV (dividend statements)
- Notarized power of attorney if filing for a spouse
- Documentation of child care expenses
- Documentation of Individual Retirement Account (IRAs)
- Documentation of any charitable contributions
- College education expenses (out of pocket)
- Statement of interest expenses for mortgages and student loans
- Alimony information, including a copy of the divorce or separation agreement
- Other relevant financial information for the tax year, such as investment statements, rental income reports and medical expenses.
Q: What about Kindergeld?
A: Kindergeld is nontaxable income because the IRS considers Kindergeld to be a German tax benefit rather than an item of income. Taxpayers who have reported Kindergeld in past income tax returns may file amended returns to obtain possible refunds.
Q: What do I do if my spouse is not available to sign the tax return?
A: If you are married and filing a joint return but your spouse is unavailable to sign, you need to have a valid, notarized power of attorney that explicitly grants the authority for tax filing. IRS Form 2848 is insufficient if the spouse's signature is not notarized. If your spouse is deployed, the IRS grants at least a 180 day extension from the Soldier's return from deployment to file taxes, so redeploying Soldiers can file their returns when they return to Germany if the spouse does not have a power of attorney.
Q: My spouse works on the German economy and pays taxes to the host nation. Do I need to report my spouse's income on our return?
A: If your spouse is a U.S. citizen or resident and you are filing a joint return, you will need to report your spouse's income on your tax return. If you are filing separately, he/she would only need to file if he/she earned more than $3,700. If he/she must file, you may still be able to exclude up to $92,900 of that income from your taxable income under the Foreign Earned Income Exclusion.
If your spouse is not a U.S. citizen or resident, he/she does not need to report his/her income. However, you cannot file as married filing jointly and receive the joint tax benefits unless you report your non-citizen spouse's income in your return.
Q: Does the Foreign Earned Income Exclusion of $92,900 apply to service members and employees of the U.S. government stationed in Europe?
Answer: No.
Q: Do I need to pay income tax to my state of residence if I live in Europe?
A: States can require their residents and/or domiciliaries to pay income tax. A state has the authority to tax domiciliaries of that state, even if the domiciliary does not currently live in that state due to a military assignment. Each state law is different and the tax center professionals will be able to determine your situation.
Q: What is my state of residence for income tax purposes?
A: Your state of residence is controlled by your physical presence in a state and/or your intent to return there and remain indefinitely. Military personnel should file in their state of domicile, which is the state where their home of record is located and/or where they can demonstrate an intent to make that state their domicile, i.e. through previously living in the state, a driver's license, voter registration, bank account, parents' address and an intent to return to that state.
In 2009, President Obama signed the Military Spouses Residency Relief Act, which states that the spouse of a service member will not lose or gain a residence for purposes of taxation as a result of a move with a military sponsor, if the spouse shares the same state of legal residence as the service member.
Q: If a retiree lives in a foreign country, can the retiree and their spouse's Social Security be exempt from taxation?
A: Although Social Security is U.S.-source income, it may be exempt from taxation if the recipient retiree is considered an ordinary resident of the foreign country and an applicable treaty exists between the U.S and that country. The U.S. and Germany have such a treaty.
Q: Do U.S. citizens have to report foreign bank accounts?
A: Yes. U.S. citizens living and working overseas must file a "Report of Foreign Bank and Financial Accounts" form with the Treasury Department by June 30th if the aggregate value of their foreign accounts exceeded $10,000 at any time during the previous calendar year.
This rule does not apply to military banking facilities such as Community Bank or on-post credit unions. The rule does apply to families who purchased homes in Bavaria that required them to use a German bank and to accounts such as Postbank or Sparkasse for paying home mortgages or local bills.
Make an appointment today. Tax centers are open from 9 a.m.-noon and 1-4 p.m. to prepare free tax returns Soldiers and eligible civilians. For more information, contact your local JMTC tax center:
Grafenwoehr: DSN 475-9258, CIV 09641-83-9258. Bldg. 216.
Rose Barracks: DSN 476-2714, CIV 09662-83-2714. Bldg. 245.
Hohenfels: DSN 466-2817, CIV 09472-83-2817. Bldg. 313.
Garmisch: DSN 440-3516, CIV 08821-750-3516. Bldg. 203, Room 004.
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