Military Tax Tips: Do Family and Retirement Affect Your Tax Bill?
5: What Are Some Helpful Tax Deductions or Credits?
In addition to mortgage interest and moving deductions, there are a few other potential deductions to keep in mind. While some are unique to the military, most are available to all taxpayers:
Travel – If you're a member of the National Guard or Reserves, you might be able to deduct a portion of unreimbursed travel expenses for regular reserve trips farther than 100 miles away [source: Military.com].
Uniforms – Most military uniforms are not tax-deductible, with the exception of dress uniforms or other types of uniforms that can't be worn off duty [source: Military.com].
Child Tax Credit – You could qualify for a credit of up to $1,000 for each child you support under age 17. This is for taxpayers who earn less than $75,000 and file as single or head of household, or up to $110,000 for those who are married and file jointly. Qualifying children must be U.S. citizens, nationals or resident aliens [source: Intuit].
Education – If you, a spouse or a dependent are pursuing a degree, or even if you're simply taking a course or two, there's a tax credit that could help pay for the tuition and fees [source: IRS].
State income taxes – If you paid income taxes to your state or local region in the past year, you should be able to deduct the expenses on your federal income tax return [source: IRS].
Donations to charity – If you itemize your taxes, goods donated to a nonprofit, church, veterans group or other qualified organization during the tax year might qualify for a deduction of anywhere from 20 percent to 50 percent of gross income [source: IRS]. Just remember to get a receipt.
4: How Should My Spouse File?
Spouses have a few things to consider when filing taxes. The first is where to file. The good news is that spouses can choose to file taxes in their state of residence, rather in the state where their significant other is stationed.
If your spouse is from a low- or no-income-tax state, having the option to file there can save both of you some money.
Filing status is another tough one if you're the spouse of a military member on active duty outside of the country. When filing jointly, both members of a married couple are expected to sign the return. But for cases in which one spouse is serving abroad, the other can get power of attorney to sign for both [source: Crooks].
And if you're legally married to a same-sex spouse in a state or country that recognizes gay marriage, the IRS wants you to report it by claiming "married filing jointly" or "married filing separately" status [source: IRS].
3: What About Retirement?
Depending on how much you contribute to your tax-deferred Thrift Savings Plan or other retirement plan through the armed forces, you might also be able to deduct the amount you contribute to an individual retirement account.
Individuals can contribute up to $5,500 to an IRA in 2014. Those who are 50 or older can add an extra $1,000 in catch-up contributions. If you do not contribute to another account at work, you will qualify for a full deduction. If you do contribute to an employer-sponsored retirement plan, you can qualify for a deduction if you make $70,000 or less filing as single or head of household, or $116,000 if you're married and filing jointly [source: IRS].
The best part? Even if you did not contribute in 2014, you can still make an IRA contribution for that year if you do it by the tax deadline. That makes it an easy go-to choice when you need a last-minute deduction.
Or you can skip the deduction and opt for a Roth IRA, wherein contributions are made after-tax and earnings generally grow tax-free. If the money is withdrawn at retirement after age 59½, you'll never pay taxes on it again.