It’s time once again to honor our veterans, those men and women who have defended our American way of life all over the globe. That’s a big job, and giving service members special breaks on their taxes is one of the ways we as a nation say “thank you.”
With tax season right around the corner it might be a good time to take a look at some of the tax benefits our soldiers, sailors and pilots can claim when they file.
- Combat pay is partially or fully tax-free. Service members serving in support of a combat zone may also qualify for the exclusion.
- Reservists whose duties take them more than 100 miles from home can deduct their unreimbursed travel expenses – even if they don’t itemize deductions.
- For low- and moderate-income members of the military, the Earned Income Tax Credit (EITC) could be worth up to $6,269 on their returns. There’s a special method to figure it for military taxpayers who get nontaxable combat pay. But if they choose to include it in taxable income, it may boost how much EITC they can get. And that can mean owing less tax or getting a bigger refund.
- Retirement plans have definite advantages. An IRA or 401(k)-type plan can save for retirement while cutting tax bills too. Service members who contribute to a plan such as the Thrift Savings Plan, may also be able to claim the Retirement Savings Contributions Credit.
- S. service members stationed overseas get an automatic extension of time to file their taxes. If they’re serving in a combat zone, military members typically have up to 180 days after they leave the combat zone to file a return and pay any tax due. Details are available in the Miscellaneous Provisions of the Combat Zone Service publication.
- Civilian spouses must both sign a joint income tax return. But if one spouse is absent due to certain military duty or other conditions, the other spouse may be able to sign for both. Otherwise, a power of attorney would be needed. The legal office in the military base may be able to help.
- Most military bases offer free tax preparation and filing assistance during income tax season. Some also offer free tax help after the April deadline. Service members who prepare their own return can e-file their federal return for free using IRS Free File.
- And when the tour of duty is over and soldiers decide to leave the service, the job search process is a little smoother. Some job search expenses – such as travel costs, resume prep costs and job placement fees – may be deductible. Their moving costs may also qualify for a deduction.
For more information on these and other tax breaks for U.S. military members, check out the Tax Information for Members of the U.S. Armed Forces page on IRS.gov. Another good reference is Publication 3, the Armed Forces Tax Guide, a free booklet packed with all sort of information and tips for service members and their families.