Military personnel and their families face unique life challenges with their duties, expenses and transitions. The IRS wants active members of the US Armed Forces to be aware of all the special tax benefits that are available to them. Below are 10 special tax benefits you should be aware of:
1. Moving Expenses
If you are a member of the Armed Forces on active duty and you PCS, you may be able to deduct some of your un-reimbursed moving expenses.
2. Combat Pay
If you serve in a combat zone as an enlisted person or as a warrant officer for any part of a month, all your Military pay received for Military service during that month is not taxable. For officers, the monthly exclusion is capped at the highest enlisted pay, plus any hostile fire or imminent danger pay received. You can also elect to include your nontaxable combat pay in your “earned income” for purposes of claiming the Earned Income Tax Credit.
3. Extension of Deadlines
The deadline for filing tax returns, paying taxes, filing claims for refund, and taking other actions with the IRS is automatically extended for qualifying members of the Military.
4. Uniform Cost and Upkeep
If Military regulations prohibit you from wearing certain uniforms when off duty, you can deduct the cost and upkeep of those uniforms, but you must reduce your expenses by any allowance or reimbursement you receive.
5. Joint Returns
Generally, joint income tax returns must be signed by both spouses. However, when one Spouse is unavailable due to Military duty, a power of attorney may be used to file a joint return.
6. Travel to Reserve Duty
If you are a member of the US Armed Forces Reserves, you can deduct un-reimbursed travel expenses for traveling more than 100 miles away from home to perform your reserve duties.
7. ROTC Students
Subsistence allowances paid to ROTC students participating in advanced training are not taxable. However, active duty pay – such as pay received during summer advanced camp – is taxable.
8. Transitioning Back to Civilian Life
You may be able to deduct some costs you incur while looking for a new job. Expenses may include travel, resume preparation fees, and outplacement agency fees. Moving expenses may be deductible if your move is closely related to the start of work at a new job location, and you meet certain tests.
9. Tax Help
Most Military installations offer free tax filing and preparation assistance during and/or after the tax filing season.
10. Tax Information IRS Publication 3
Armed Forces’ Tax Guide is an excellent resource because it summarizes many important Military-related tax topics.