Top Tax Deductions for Military Personnel

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.

top tax deductions

Top tax deductions for military personnel

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.

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7 thoughts on “Top Tax Deductions for Military Personnel”

  1. I think you get the point with this article. Serving in the military offers numerous extraordinary expense favorable circumstances. I think the two best favorable circumstances are the expense free house and food. This alone can spare Soldiers thousands of dollars a year in duties.

  2. I am always glad to see advice to save each and every receipt for expenses relating to employment, moving, or charitable donations. So many people believe that if they are just honest with the IRS, if or when they are audited, things will be just fine. They will not, unless you have paper documentation to back up your claims. During tax season, we have a favorite saying in my tax office: the truth is not the truth unless you have a receipt!

  3. Great post Larry! many people do not realize that there are many different types of deductions. Keeping all receipts and accurate records are very important. A small filing cabinet with files of dates is usually a good resource. If you do your taxes yourself, make sure and read what deductions are available to you. In many cases, as you said, uniforms, travel expenses, and many more things that are a cost are deductible. There is a whole lot of information on the web and you can usually ask the IRS and they will answer any questions you have.

  4. I think you hit the nail on the head with this article, Larry. Serving in the military offers many great tax advantages. I think the two best advantages are the tax free housing and food allowance. This alone can save Soldiers thousands and thousands of dollars a year in taxes, because these allowances are not considered taxable income.

    Chuck

    1. I agree, excellent article. There is a lot of helpful information there about taxes for military personnel. Also, the advice about documentation is crucial for every American taxpayer. I had a friend who got audited for her deductions with regards to donating to charity. Even though she donated over 3, 000 in clothing, she didn’t have any documentation for it so she ran into some trouble.

      1. There is lots of great tax information available for soldiers if they go out and look for it. Some places even do taxes for free. I always told my soldiers never to deduct stuff they didn’t have documentation for. When you do that you can really get into trouble with the IRS. And who wants that?

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