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Don't Forget Your Military Tax Breaks

 

If you're in the U.S. military, Uncle Sam thanks you for your service in the way of special tax breaks. Some types of income are not taxable, some deductions and credits are especially for you, and you may be able to get more time to file your federal tax return and pay any taxes due.

Here's a breakdown of ways your military service affects your taxes.

  1. Combat exceptions: If you serve in a combat zone (designated as such by an executive order from the president), you can extend your tax filing deadlines and take more time to pay your taxes. Also, your combat pay is partially or fully tax-free; and if you support combat troops, you may also be able to claim this exemption.
  2. Moving breaks: If you serve in the military and must relocate, you may be able to deduct some of your unreimbursed moving costs tied to a permanent change of station. Fill out Form 3903.
  3. EITC advantages: Nontaxable combat pay that you choose to include on your tax return may boost your Earned Income Tax Credit, lowering your taxes or increasing your refund. The EITC is a refundable tax credit for low-to-moderate-income working folks, especially those who are parents. The amount of the benefit depends on your income and number of children. In 2015, the average EITC claimed was more than $2,400.
  4. Sign for your spouse: If your spouse is away on military duty or conditions, you may be able to sign your joint income tax return on his or her behalf. You may need a power of attorney.
  5. Reservists breaks: Reservists who must travel more than 100 miles from home to perform their duties can deduct unreimbursed travel expenses, even if they don't itemize deductions on their tax return.
  6. Clothing deductions: You can deduct the cost and upkeep of uniforms you can't wear while off duty.
  7. ROTC allowances: ROTC students do not have to pay taxes on some education and subsistence allowances paid to them in advanced training.
  8. Civilian job searches: If you leave the service and look for work, you can deduct certain job search expenses such as travel, resume prep, job placement and moving costs.
  9. Tax prep: Most military bases offer free tax prep and filing help during and even after the April tax season, so go to the professionals who are available for this, or another qualified tax professional, to make sure you're taking advantage of all the appropriate tax breaks.

This is just a basic overview, and tax rules can change frequently. Consult with a financial professional about your particular situation.

 

 
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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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