Members of the military have numerous ways to cut their tax burden, legally and simply. The IRS has long made allowances for the hardship of military life, which is the reason that the current tax code, though an ever-changing animal, still offers dozens of ways for members of the armed forces to save money on their tax liabilities when filing time arrives.
Moving expenses are one of the main areas where civilian and military tax laws differ. Civilians are deluged with pages of fine print about what is and is not deductible in this expense category. For military members, the IRS regulations are rather straightforward and allow lenient deduction percentages for nearly all moving-related expenses. While each situation is different, just remember to retain every receipt that is remotely related to a moving expense. Chances are you will be able to deduct each expense when filing.
Uniform expenses in excess of your military allowance are usually deductible. Again, keep receipts and evidence of your allowance amount. When itemizing your tax deductions, all the little things, like uniform maintenance fees, add up rather quickly.
Members of the active military, as well as the Reserve and Guard are allowed to deduct a generous mileage rate when they travel more than 100 miles for duty. In addition, any hotel bills and other unique travel expenses while at a duty station are also deductible.
For civilians, it is usually tough to qualify for the Earned Income Tax Credit because income limits are set quite low. However, since combat pay is not counted as a part of taxable income, military personnel who get combat pay can show a lower income level and thus qualify for EITC in many cases.
Perhaps the most publicized, military-specific tax advantage results from deployment in a combat zone. Even if you only serve for one day in a combat zone, the pay for that entire month is tax-exempt. In addition, if you are hospitalized for any injuries that you received while in combat, or for any disease that resulted from the deployment, the month that you are hospitalized is also a month for which you will not have to pay tax on your pay. The IRS considers being in a hospital, as a direct result of combat, the same as combat itself. Thus, you as a military member can shield more of your income from taxation.
In all cases, remember to keep good records of your income and expenses, since the IRS will ask for documentation in many instances.
About the Author: Larry Bell is a professional writer, comedian, and automotive enthusiast whose work can be seen at www.myperfectautomobile.com and many other online publications. He is a graduate of the University of Notre Dame and the Thunderbird School of Global Management.