Top Five Tax Breaks to Ease the Burden for Military Members
Military Saves Communications Associate For military servicemembers and their families, tax time can be an especially stressful time. With permanent change of station (PCS) moves, deployments and all the changes those life events involve, it’s easy for servicemembers to miss some great tax perks. Here is a list of the top five tax breaks (in my opinion) to help you maximize your tax return and breathe a little easier this tax season.
5. FREE Tax Assistance Consider using your installation’s free tax filing service, especially if your tax return is pretty straightforward. Another option is to use the free Military OneSource online tax filing service, available to eligible servicemembers.
4. Don’t Forget to Deduct Expenses. Don’t forget to know and claim your military-related deductions! According to Ethan Ewing, Military.com, any permanent change of station (PCS), travel, transportation and education expenses left unreimbursed by the military may be deducted. Many of these deductions also apply to National Guard & Reserves, (thanks to USAA via Military.com), so keep all receipts handy and organized.
3. There’s an Exception for That. Take advantage of every tax time exception available to servicemembers and their spouses. Military.com (courtesy of USAA) offers a list of these exceptions. Here are a few:
- Are you returning from a deployment to a combat zone and concerned about the looming tax deadline? Rest assured, time is on your side. You can apply for extensions for tax filing, paying taxes, claiming refunds and even contributing to your IRA. Military spouses!
- Did you know that under the Military Spouses Residency Relief Act, you can choose the previous state you lived in for tax filing purposes? If your previous state had lower or no income tax that could mean more savings for you.
- And if you are currently deployed or on temporary duty (TDY), your spouse can submit your joint tax returns using a power of attorney, rather than waiting for you to sign.
2. Earned Income Tax Credit. Don’t overlook the Earned Income Tax Credit (EITC), “a refundable federal income tax credit for low- and moderateincome working individuals, couples and families,” according to Laura Roler, Military Saves. If you qualify for this tax credit, the money you receive from it may be used to kick start an emergency fund! Determine your eligibility and learn more about EITC today.
1. Tax-Exempt Income. Did you serve in a combat zone during 2015? If so, your income may be tax-exempt, according to Ethan Ewing, Military.com. That exemption may also apply to reenlistment bonuses and other types of income earned in a combat zone. For all the details, you can also visit the IRS tax information for members of the military. Use these tax tips to make tax time less stressful, maximize your return and save money. And don’t forget, once you’ve received your refund, prepare for military life’s surprises with your tax return. Set a goal. Make a plan. Save automatically. Military Saves, managed by the nonprofit Consumer Federation of America (CFA), seeks to motivate, encourage, and support servicemembers and military families to save money, reduce debt, and build wealth. Learn more at militarysaves.org.
Written by guest blogger Alicia D. Blair, a Military Saves Communications Associate
Published Mar 28, 2016.