Six tax perks for US Armed Forces

January 01, 2017 by Selena Quintanilla
Armed Forces member writing on a notepad

There are a few tax benefits available to our military personnel. These adjustments are designed to give back to the men and women who have given so much for us! It is important that our troops and their families are aware of what is available to them before submitting their annual returns.


Below is a summary of some perks available to our servicemen and women:
 

  • Combat pay may be partially (or entirely) tax-free if you serve in a combat zone. If you serve in support of a combat zone, you may also qualify for this exclusion.
  • Reserve-related duties that require travel of over 100 miles from home can be deducted as unreimbursed travel expenses, without itemizing deductions, when all requirements are met.
  • Low-or moderate-income service members may be eligible for an Earned Income Tax Credit of up to $6,269. Including nontaxable combat pay in taxable income may boost this credit, which can mean owing less tax or, even better, getting a larger refund.
  • Paying into a traditional individual retirement account (IRA) for you or your spouse may also help to cut taxes while saving for retirement.
  • U.S. service members stationed abroad no longer need to stress over standard filing deadlines, as they are granted an automatic 2-month extension. (This is not an extension of time to pay, so make sure you have paid your full liability or you will be assessed additional interest on any unpaid tax after the filing deadline.) File Form 4868 to receive an additional 4-months extension to mid-October.
  • For members serving in combat zones, the deadline for both filing tax returns and the payment of any taxes due is generally extended for 180 days following their last day of qualifying service.


Excited about these benefits – but still don’t understand how to take advantage of them? No worries!
 

  • Most military bases now offer tax preparation and filing assistance during tax season at no charge.
  • For those filing a joint return, a military installation’s legal office may be able to authorize a spouse via POA form to sign on behalf of the absentee.
  • Moving expenses, travel costs, job placement fees and even preparation of resumes may be deductible for those active military personnel getting ready to separate and adjust to civilian life.


Additionally, the IRS has an Armed Forces Tax Guide (Publication 3, available for download at www.irs.gov) that describes these benefits in hopes of further educating and assisting our troops in taking full advantage of what is being offered.


Visit IRS.gov for further explanation of these benefits.

Reading not your style? You’re not alone! The IRS has assembled a few informative videos; just click on one of the links below!

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Selena Quintanilla, CTEC
Communications Associate

 

Selena Quintanilla is a Communications Associate at TaxAudit, and a California Tax Education Council (CTEC) registered tax professional. She is now on a mission to bring clarity and comprehensibility to a topic that keeps us all up at night at least once a year-TAXES! Please, send coffee! 


 

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