So the world has not ended yet, which means, consequently, we all will still have to file taxes come April. While at the best of times, filing taxes can be daunting, but not very difficult. What about if you’re in the military? Wouldn’t it be presumed that there are certain things that can be considered deductions, available credits and whatnot?
I am including some points to take into consideration when serving in the military—5 helpful tax tips for military personnel, to be precise.
• It is important to think about GROSS income. Military personnel have many different types of income, so it’s important to think about what types of pay and allowances that can be eliminated from your gross pay. Examples of these exclusions include but are not limited to living/moving allowances, travel, combat zone pay, and death allowances.
• Retirement is another possible deduction on your taxes. Generally, it is possible to deduct some contributions made to a traditional IRA (Individual Retirement Account), but if you have or your spouse has been covered by an employer-maintained IRA, some deductions are not eligible. It is best to check the IRS website for more information on this as well.
• Don’t forget about Earned Income Credit (EIC)! Obviously, if you are serving in the military, whether active duty/Reserve/Guard, you should be entitled to EIC. With children (1 or more) it is almost a guarantee that you will qualify for EIC.
• Educational expenses will most definitely be included as deductions. First of all, for military service members, any and/or all educational expenses may be eligible for deduction if it meets the following requirements as stated by the IRS: 1- “It is required by your employer or the law to maintain your salary, status or job. This must also serve a bona fide business purpose of your employer.” and 2-“It maintains or improves skills needed in your present work.” Travel may also be included in deductibles.
• Be sure and check out the requirements of uniform expenses as tax deductible. Generally, uniform expenses are non-deductible, however, unless you are prohibited from wearing the military uniform off duty. In this type of situation, you may deduct the cost/expense of upkeep of the uniform. Some examples (according to the IRS) include: military dress uniforms/utility uniforms prohibited from wearing off duty, articles not replacing regular clothing such as insignia of rank, epaulets, etc.
While these are a few tips to consider when filing your taxes as a military service member, I am no tax expert! I would definitely suggest finding out more about the points listed above (either from a tax consultant or the IRS), and also finding more information on other possible deductions, credits, and allowances through an adviser. These are very relevant, however, and the reason why I have included them as 5 helpful tax tips for military personnel.
About the Author: Lauren is a stay at home mom currently working from home as a freelance writer. She is certified in Education with a background in education, writing, and tutoring to help students develop their educational skills. She comes from a military family and writes articles about education, military life, and personal development.
Chuck Holmes
Former Army Major (resigned)
Publisher, Part-Time-Commander.com
Email: mrchuckholmes@gmail.com
Suggested Resources
Our Books & Training Courses
Recommended Reading List
Great Post, Lauren.
These are very helpful tax tips for any military personnel. If i was ask to pick the important one,
It would be to keep keep records/keep receipts
These are all very good tax tips to our service people. If I had to pick the most important one, it would be to keep keep records/keep receipts. You will need documentation of all expenses in order to itemize your deductions when you file your taxes.
One tip: EIC (the earned income credit that you refer to in your third bullet) is determined solely by the amount of money you make in the tax year. It is not in any way tied to your service in the military. In fact, many military service people make too much money to qualify for EIC. The earned income credit is designed to benefit the lowest wage earners in the US.
Great tax tips, Lauren.
If I could recommend some additional tax tips it would be the following:
1) Seek out a qualified tax professional to educate you. Hire a CPA for an hour or two and get some tax planning advice so you can minimize your taxes each year. This will be money well spent.
2) Prepare your own taxes. Even if you don’t enjoy doing this, you will learn a lot by doing your own taxes a few times. You can use a service like Turbo Tax for a very affordable price.
3) Keep meticulous records. Whatever you do, keep good track of your records. Create a filing system you can use and keep it updated every month.
4) Consider starting a home business. If you or your spouse can start your own part-time home based business you might be eligible to save even more money on taxes. Once again, talk with your CPA.
I hope this helps. Once again, thanks for the guest post.
Chuck