Military Tax Tips: Find More Help for Filing Your Taxes
2: What If I Am a Veteran?
If you're a veteran receiving disability benefits, you can exclude those earnings from your gross income. Disability benefits can include pension payments, dependent care and assistance, or grants to outfit your home or vehicle with special equipment that takes your disability into account [source: IRS].
Federal refunds are available to veterans whose disability amount has increased or who received special compensation for combat. This is a special circumstance, available only if the Department of Veterans Affairs has either granted or re-assessed your benefits. If that occurred in a previous year, you could file an amended tax return using form 1040X. Because of the complexity involved, it makes sense to seek professional advice if you think you might be eligible for this type of refund [source: IRS].
Regardless of disability, many veterans are also eligible for other types of federal tax credits, including the Earned Income Tax Credit. If you decide to go back to school or get involved in job training after the military, education credits can help cover the costs. And business owners who hire veterans can qualify for a credit known as the Work Opportunity Credit.
1: How Can I Get Help?
Military personnel can get free tax help through a government program called the Volunteer Income Tax Assistance program (VITA). Services include tax counseling, preparation of tax returns and electronic filing. The volunteers are vetted by the IRS, and the program operates in public centers across the country.
These services are available to disabled and elderly Americans too. Many military installations have VITA volunteers on base. To find a center near you, visit the IRS website or call 800-906-9887.
If you prefer to do it yourself, the IRS publishes a handy Armed Forces Tax Guide, also known as Publication 3 [source: IRS]. The booklet, which can be found online or downloaded as a PDF, includes example calculations and exercises to help you troubleshoot your own taxes.
While you can trust publications found on the IRS.gov website, be wary of email correspondence that claims to come from the IRS. Even military email addresses ending in .mil could be suspicious. As recently as 2012, the IRS became aware of a phishing scam targeting taxpayers getting income from Veteran's Affairs. The taxpayers were asked to send personal documents that were then used to commit identity theft [source: IRS].
If you receive any type of email requesting personal information, verify the source before responding. Check with the IRS's list of suspicious emails to stay on the lookout for common scams.
Author's Note: 10 Tips for Filing Military Taxes
The Department of Defense and IRS make attempts to flag military members serving in combat zones so they know not to come after them if a return is a few weeks late. Service members who are wary of bureaucracy or just want to provide a second line of defense can also remind the government of their special status by sending an email to firstname.lastname@example.org [source: IRS]. It could be a good idea to go a step further and include the words "Combat Zone" along with deployment dates on the top of the completed tax return [source: National Military Family Association].
While combat pay in certain areas is tax-exempt, service members should be aware that it will show up on your W-2. Instead of being listed in the wages, tips and compensation box, it will be in the Social Security wages and Medicare wages boxes [source: National Military Family Association]. Most taxpayers can ignore these boxes when filing returns.
- Crooks, Tara. "Tax Tips for Military Spouses." Military.com. (Nov. 14, 2014) http://www.military.com/money/personal-finance/taxes/tax-tips-for-military-spouses.html
- Department of Defense. "Homeowners Assistance Program." April 10, 2013. (Nov. 16, 2014) http://hap.usace.army.mil/home.html
- Internal Revenue Service. "2014 IRA Contribution and Deduction Limits – Effect of Modified AGI on Deductible Contributions If You Are Covered by a Retirement Plan at Work." Oct. 23, 2014. (Nov. 18, 2014) http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/2014-IRA-Contribution-and-Deduction-Limits-Effect-of-Modified-AGI-on-Deductible-Contributions-If-You-ARE-Covered-by-a-Retirement-Plan-at-Work
- Internal Revenue Service. "Information for Veterans with Disabilities." March 28, 2014. (Nov. 14, 2014) http://www.irs.gov/Individuals/Information-for-Veterans-with-Disabilities
- Internal Revenue Service. "Military Moving Expenses." (Nov. 14, 2014) http://apps.irs.gov/app/vita/content/globalmedia/teacher/18_militarymoving_instructor_presentation.pdf
- Internal Revenue Service. "Military Pay Exclusion – Combat Zone Service." April 17, 2014. (Nov. 14, 2014) http://www.irs.gov/uac/Military-Pay-Exclusion-%E2%80%94-Combat-Zone-Service
- Internal Revenue Service. "Notifying the IRS by E-Mail About Combat Zone Service." Aug. 18, 2012. (Nov. 20, 2014) http://www.irs.gov/uac/Notifying-the-IRS-by-E-Mail-about-Combat-Zone-Service
- Internal Revenue Service. "Preview of 2014 EITC Income Limits, Maximum Credit Amounts and Tax Law Updates." Nov. 14, 2014. (Nov. 14, 2014) http://www.irs.gov/Individuals/Preview-of-2012-EITC-Income-Limits,-Maximum-Credit--Amounts-and-Tax-Law-Updates
- Internal Revenue Service. "Publication 3 (2013), Armed Forces' Tax Guide." 2013. (Nov. 13, 2014) http://www.irs.gov/publications/p3/index.html
- Internal Revenue Service. "Publication 3." April 23, 2014. (Nov. 14, 2014) http://www.irs.gov/publications/p3/ar02.html
- Internal Revenue Service. "Special Tax Considerations for Veterans." Feb. 20, 2014. (Nov. 18, 2014) http://www.irs.gov/Individuals/Military/Special-Tax-Considerations-for-Veterans
- Internal Revenue Service. "Tax Information for Members of the U.S. Armed Forces." April 23, 2014. (Nov. 14, 2014) http://www.irs.gov/uac/Tax-Information-for-Members-of-the-U.S.-Armed-Forces
- Internal Revenue Service. "Worksheet A - 2013 EIC - Lines 64a and 64b." (Nov. 17, 2014) http://apps.irs.gov/app/vita/content/29/media/fred_eic_worksheet_1040_instructions.pdf
- Intuit TurboTax. "7 Requirements for the Child Tax Credit." 2014. (Nov. 14, 2014) https://turbotax.intuit.com/tax-tools/tax-tips/Family/7-Requirements-for-the-Child-Tax-Credit/INF15610.html
- Intuit TurboTax. "Civilian Pay Earned by Active Duty Military." Nov. 3, 2014. (Nov. 14, 2014) https://ttlc.intuit.com/questions/1899476-civilian-pay-earned-by-active-duty-military
- Military.com. "Military Taxes: Figuring Gross Income." (Nov. 15, 2014) http://www.military.com/money/personal-finance/taxes/military-taxes-figuring-gross-income.html
- Military.com. "Military Taxes: PCS Costs." (Nov. 14, 2014) http://www.military.com/money/personal-finance/taxes/military-taxes-permanent-change-of-station.html
- Miltary.com. "Special Tax Breaks for Military Members." (Nov. 14, 2014) http://www.military.com/money/personal-finance/taxes/special-tax-breaks-for-military-members.html
- National Military Family Association. "Get Info: Taxes." (Nov. 20, 2014) http://www.militaryfamily.org/get-info/money/taxes.html
- National Technical Information Service. "Chapter 4 – Figuring and Claiming the EIC." IRS Tax Map. 2013. (Nov. 17, 2014) http://taxmap.ntis.gov/taxmap/pubs/p596-003.htm
Many Americans don't think about their tax bills until the new year. But there are things you need to do before Dec. 31 if you want to pay less later.