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Gross income, combat pay exclusions, employee business deductions, child tax credits, first-time homebuyer credit repayment...is your head spinning yet? The tax season is a doozy for any citizen, but military taxes can be exceptionally complicated. Your income sources may have changed over the year, you may have had to relocate, or you might have expanded your family. All of these changes will impact how you file your taxes.
Let’s look at some things to consider.
When filing your military taxes, you may have a lot of questions. Luckily, the government has some comprehensive resources to help you out. Here you will find tax information for members of the US Armed Forces, provided by the IRS. This resource explains tax laws that affect service members, along with information about the first-time homebuyer credit and information on stimulus payments.
There is also a page dedicated to current military personnel, combat service members, former military personnel, and disabled veterans here.
Military members and their families may be able to deduct some expenses from this year’s tax return. The list varies depending on your situation, but below are some common exemptions or deductions:
- Combat zone exclusion (you may be able to exclude active duty pay earned while serving in a combat zone)
- Contributions into an IRA
- The tax if you sold your home
- Moving expenses
- Traveling expenses
- Transportation expenses
- Educational expenses
- Uniform expenses
- Taxes for military families aren’t one-size-fits-all, so your specific exemptions and deductions will depend on your tax situation. Always consult with a tax professional or CPA for guidance.
Gathering all necessary paperwork is often the hardest part of tax season! If you or your spouse is in the military, you are no stranger to the many paperwork hoops to jump through. Below is a short list of the documents you will need to file your 2017 military taxes:
- W2s, obtained from the Defense Finance and Accounting Service (can also view online)
- 1099s, if needed
- Military ID
- Social Security numbers
- Deduction and credit information
- Bank account and routing information (to receive your refund through direct deposit)
- Last year’s tax return
- Any documents for investments, rental properties, or mortgages
- This isn’t a comprehensive list, but it’s a start.
Military Tax Filing
The good news is that in recent years, military tax filing has gotten much easier. Military One Source has teamed up with tax professionals to offer MilTax, an online tax preparation and e-filing platform. H&R Block offers free federal and state online filing and also has a military tax information center. TurboTax has released a military discount on their filing software for E1-E6 ranks. Or, you can always file your taxes the old-fashioned way, through the mail! The IRS explains how to file.
This year, the deadline to file (without any extensions) is Tuesday, April 17th. To learn more about military taxes and considerations, check out this 2016 article from The Tax Adviser.