There are many tax provisions that military members and their families can take advantage of. Here are some top tax tips to consider before filing taxes:
Tax Filing & Deadlines
The IRS extends many options for military members and their families if a soldier is overseas and in a combat zone. For example, the deadline for filing a return is automatically extended if a soldier is in a combat zone or has a qualifying service outside of a combat zone.
Free Tax Filing Services and Consultants
Military members and their families can get help at many installations through the Voluntary Income Tax Assistance program (VITA). The legal center on base should be able to confirm if this service is available at the installation. Additionally, through H&R Block and Military One Source free tax filing is available.
Gross Income Exclusion & Deductions
Service members receive many types of pay and allowances. The Internal Revenue Service requires that some of these be included in the gross income calculation while others are excluded from a soldier’s gross income. The following are excluded items from gross income according to the IRS:
Combat Zone Exclusion
Service members can exclude certain pay from gross income if they are in a combat zone. Typically the pay must be earned in a month that a service member served in a combat zone.
Types of pay include:
- Active duty pay earned in any month served in a combat zone
- Imminent danger/hostile fire pay
- Reenlistment bonus
- Pay for accrued leave
- Pay received for duties as a member of the Armed Forces in clubs, messes, post and station theaters, and other non-appropriated fund activities.
- Awards for suggestions, inventions, or scientific achievements.
- Student loan repayments
- State bonus pay for service in a combat zone
Miscellaneous Pay Allowances
There are variety of pay allowances that IRS excludes from income including defense counseling, disability, group term life insurance, professional education, ROTC educational and subsistence allowances, survivor and retirement protection plan premiums.
BAH (Basic Allowance for Housing), BAS (Basic Allowance for Subsistence), Housing and cost-of-living allowances overseas and OHA (Overseas Housing Allowance) compensation are excluded from gross income according to the IRS.
Military family dependents are extended some exclusions from gross income as well including certain educational expenses for dependents, emergencies, evacuation to a place of safety, and separation.
Traveling from one workplace to another or overnight travel is excluded. Traveling to and from work is not. Benefits received for dislocation, military base realignment, and closure can also be excluded. Other types of moving expense that can be deducted or excluded depending if the expense was a benefit or out-of-pocket un-reimbursed cost include move-in housing, moving household and personal items, moving trailers or mobile homes, storage, temporary lodging and temporary lodging expenses.
Any death gratuity paid to a survivor is excluded from gross income. Un-reimbursed dependent travel and burial services are also deductible.
In-kind Military Benefits
The military provides many in-kind benefits, some of which do not need to be included as gross income, such as:
- Dependent-care assistance program
- Commissary/exchange discounts
- Legal assistance
- Medical/dental care
- Space-available travel on government aircraft
IRS Military Tax Tips Video
The IRS addresses many tax provisions for military members and their families in this short video including:
- Military specific tax deductions
- Out-of-pockets travel expenses
- Military uniform deductions
- Tax deadlines
- Travel expenses
- Filing taxes and postponing for members of the military who are on duty overseas
Video on Military Tax Tips from the IRS
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