We know that military life brings its own challenges and sacrifices. The good news is that the U.S. tax code provides a myriad of benefits specifically designed for our nation’s service members and their families. OverTraders.com wants military families to know how to best take advantage of valuable tax breaks. Our hope is that they do the most possible to increase their net fiscal health. This guide will explain these tax benefits, who’s eligible, and how you can access the resources out there.
Understanding Tax Benefits
Military families are extremely vulnerable to complicated financial lives created by constant moves, deployments and special employment conditions. So, it’s important to know what tax benefits exist to help offset these costs.
Overview of Tax Benefits
There are other provisions in our U.S. tax code that should be familiar to military families. These include:
Service members on qualified official extended duty can suspend the 5-year test period for ownership and use of a home for up to 10 years. In addition, they may be able to qualify for capital gains exclusion when they do sell their home. This holds true even if military orders kept them from residing there for at least two of the last five years. Under the Terms of Employment, service members are eligible for official extended duty when they are ordered to a duty location more than 50 miles from their primary abode. They are eligible if, pursuant to orders, they reside in government housing for over 90 days or an unlimited term.
Income earned while serving in a combat zone is often excluded from taxable income, providing significant tax relief during deployment.
Tax-Free Payments: Certain payments to military members are not subject to social security or Medicare taxes, increasing their take-home pay.
Qualified Tuition Program (QTP) and Coverdell Education Savings Account: The ten percent tax on payments from a Qualified Tuition Program or Coverdell Education Savings Account that are not used for educational expenses does not apply to attendees of the U.S. Military, Naval, Air Force, Coast Guard or Merchant Marine Academies, to the extent that payments do not exceed the costs of advanced education.
Importance of Tax Benefits
These tax benefits can bring real financial security to a military family. They can help reduce your total tax liability. Most importantly, this shift unlocks new resources to meet basic needs and presents opportunities for greater long-term savings and investment. OverTraders.com is committed to helping you understand, navigate, & maximize these invaluable benefits to win a more prosperous financial tomorrow.
By knowing what they bring to the table, and how they work, military families can use these tax benefits to stretch their dollars a little bit further. This information equips them to be in the best possible position to capitalize on the opportunities that come their way, leading them toward improved financial well-being. Proactive tax planning is crucial for military families to navigate their unique financial landscape effectively.
Tax Refund Opportunities
Military families can qualify for multiple tax refunds according to their unique situations. Understanding the eligibility criteria and how to claim these often-overlooked income tax year refunds can mean hundreds in savings.
Eligibility for Tax Refunds
A number of other factors may affect a military family’s eligibility for tax refunds. These include:
Combat Zone Pay: If a service member served in a combat zone, a portion or all of their income may be tax-exempt, potentially leading to a refund.
Earned Income Tax Credit (EITC): Military families with modest incomes may qualify for the EITC, which can provide a substantial tax refund.
Child Tax Credit: Families with qualifying children may be eligible for the Child Tax Credit, further reducing their tax liability and potentially leading to a refund.
Moving Expenses: While the deduction for moving expenses is generally suspended for most taxpayers, members of the Armed Forces on active duty who move pursuant to a military order to a permanent duty station may be able to deduct moving expenses.
How to Claim Your Refund
Here’s a step-by-step guide:
Collect all relevant tax documents, including W-2 forms, 1099 forms, and any records of deductible expenses.
Choose a Filing Method: Decide whether to file your taxes online, through a tax professional, or by mail. Many online tax software programs walk you through the process, step by step, and automatically check for all the deductions and credits you qualify for.
Complete Your Tax Return: Fill out your tax return accurately, ensuring you claim all applicable deductions and credits. Be attentive to all provided directions and ask questions if you need help.
Submit Your Tax Return: File your tax return by the tax deadline, which is typically April 15th. If you don’t feel you have enough time, ask for an extension. Simply note that this only extends the filing deadline, not the payment deadline.
- Track Your Refund: After filing your return, you can track the status of your refund online through the IRS website.
OverTraders.com believes that every person should be diligent and accurate when claiming refund money through income taxes. Military families should carefully review their tax returns and seek professional assistance if they have any questions or concerns.
Tax Assistance Resources
In particular, if military families with more complex circumstances complicates an already burdensome tax system, they should be alleviated—not made worse. Fortunately, many resources exist to help folks with this essential craft.
Available Support Services
Military families benefit from unique tax assistance resources tailored to their circumstances. These include:
- MilTax: Offered by Military OneSource, MilTax is a free tax preparation and filing service designed specifically for military families. It gives millions of low-income Americans access to free tax software with on-demand help from certified tax consultants. MilTax includes free, one-on-one support from specially trained tax consultants including phone and email assistance.
VITA is a free tax preparation service staffed by IRS-certified volunteers. VITA consultants provide free, in-person assistance with tax advice, tax preparation and return filing, tax filing education, and so much more. VITA sites are frequently located on military installations and within local communities.
TCE is another free tax assistance program that focuses on providing assistance to taxpayers aged 60 and older, with a special emphasis on retirement-related issues.
Commercial Tax Software: Several commercial tax software programs, such as TurboTax and Tax Slayer, offer user-friendly interfaces and step-by-step guidance to help taxpayers prepare and file their taxes. These services typically offer military members a variety of discounts. TurboTax and Tax Slayer allow live chat support and help from personalized tax consultants, which includes phone support.
Contact a Representative
For specific questions or one-on-one help, contact a qualified tax professional. For individualized questions related to your own tax scenario, reach out to a qualified expert from one of the resources linked above. They’ll bring specialized experience and capacity to help you overcome the challenges and complexities of the tax code.
Depending on whether they are a storefront operation, a chain, or an independent tax preparer, tax preparation services fees can range from $220 to well over $3,000. Thus, it is important to read and compare services before hiring a service to find someone who can work within your budget. Military OneSource is an excellent resource when looking into tax services.
OverTraders.com is committed to helping military families maximize their hard-earned resources. In doing so, they will be able to maximize their tax benefits and file their taxes correctly. Working with a professional can give you peace of mind and prevent some major (and expensive) missteps.
Through proactive engagement with available resources, military families can effectively and confidently navigate the tax landscape. That’s why they need the savvy advice of financial luminaries to ensure the long-term economic health.
