Content provided courtesy of USAA.
As tax time approaches, military members and their families should take time to understand the special advantages the IRS extends to them.
Here are some of the benefits that could apply to you:
For deployed service members: Many service members know combat pay isn’t taxable. This benefit can save thousands of dollars, and it’s already reflected on tax forms. Deployed members also may request extensions for filing tax returns, paying taxes and contributing to IRAs. But be aware of the potential downside. A delay in filing can delay a refund, too, if the IRS owes you money.
For members of the Reserve and National Guard: When your Reserve or Guard duties take place more than 100 miles away from home, you may be able to deduct unreimbursed travel expenses. What’s more, the cost to purchase and maintain uniforms can be tax-deductible if off-duty wear is prohibited — as is usually the case. Just make sure to factor in any uniform allowance or reimbursement.
For military spouses: Since 2009, the Military Spouses Residency Relief Act has allowed spouses to keep an established state of residency when accompanying a service member relocating on orders. That means those married to service members don’t necessarily pay state income taxes in the state where they’ve relocated.
For homesellers: Taxpayers selling homes may avoid paying capital gains taxes if they’ve lived in the home for two of the five years before the sale. Uniformed members may get relief from this rule if orders require them to move — though the details can be complex. Additionally, if you take a trip to search for a new home because of a military-directed move, those costs can be tax-deductible.
Free assistance: Don’t forget that free tax assistance is available at most military installations. The Volunteer Income Tax Assistance program, known as VITA, offers free advice and tax preparation help to military families. The program’s volunteers are certified by the IRS.
Learn more about tax benefits for service members on the IRS website.
Powered by Facebook Comments