Being in the military offers its members certain tax advantages which many people don't realize.
If you are in the armed forces, there are special tax breaks for you. Some of those are that you may get more time to file your tax return, some may receive more time to pay their income tax and some types of pay are nontaxable.
The following is a list of 10 of the most common breaks:
1. Deadline extensions. Some members of the military, especially those who serve in a combat zone, can postpone some tax deadlines. If this applies to you, then you may be able to receive automatic extensions of time to file your taxes and pay on your taxes.
2. Combat pay exclusion. If you served in a combat zone, your combat pay is partially or fully tax-free. If you serve in a support of a combat zone, you may also qualify for this exclusion. Please contact your pay office as to the correct coding of this combat pay. It must be reflected as "Q" on your W2 form.
3. Moving expense deduction. You may be able to deduct some of your unreimbursed moving costs on IRS Form 3903 and annotate this on the first page of the 1040, under Adjustments. This normally applies to the move being a permanent change of duty station and it being at least 50 miles from current residence/work. You must also include the amount received on your travel or DFAS-Rome W2 received for your move.
4. Earned income tax credit or EITC. If you get nontaxable combat pay, you may elect 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. Last tax year, the maximum credit for taxpayers was $6,242. The average amount of EITC claimed was more than $2,400. You can figure it both ways and choose the best option for you or consult a tax professional to guide you.
5. 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. This can be done using a Special Power of Attorney (SPOA) for federal and State tax preparation and issues or use the IRS POA Form 2848 (only good for federal return and not State). You can obtain a SPOA from your local Legal Assistance Office at your local installation.
6. Reservists' travel deduction. Reservists whose reserve-related duties take them more than 100 miles away from home can deduct their unreimbursed travel expenses on IRS Form 2106, even if they do not itemize their deductions.
7. Uniform deduction. You can deduct the costs of certain uniforms that you cannot wear off duty. This includes the costs of purchase and upkeep. You must reduce your deduction by any allowance you get for these costs (Uniform Clothing Allowance). Officers usually have more of an ability to claim these costs than enlisted.
8. ROTC allowances. Some amounts paid to ROTC students in advanced training are not taxable. This is an allowance and is not considered pay. It will not be annotated on a W2 nor on your school/institution 1099-T. This also applies to allowances for education and subsistence. Active Duty ROTC pay is taxable and will be reflected on a W2 as pay/income. An example would be summer advance camp, which is taxable.
9. Civilian life. Did you know that after leaving the military (ETC/retirement) and look for work, you may be able to deduct some job search expenses? You may be able to include the cost of travel, preparation of a resume and job placement agency fees. Moving expenses for job search also qualifies as a tax deduction.
10. Tax help. Most military bases offer free tax preparation and filing assistance during the tax filing season by way of a Military VITA (Volunteer Income Tax Assistance) center. Fort Sill Legal Assistance Office offers tax assistance by appointment only after tax season.
Assistance is available to service members, retirees and family members with valid military identification. Taxpayers should ensure they have all their information before filing a tax return, including a copy of their prior year's tax returns if possible.
For more information, call the Fort Sill Income Tax Assistance Center at 580-442-6445/8819.
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