[1]Active military service can make tax filing challenging, especially if the service member is deployed or on an intensive training mission. MilTax [2] is a Department of Defense program designed to lessen the burden on service members by offering free tax return preparation and e-filing software for all military members and some veterans, with no income limit. This includes federal tax returns and up to three state income tax returns for each qualified user.
In addition, many military bases offer free tax preparation [3] and filing assistance during the tax filing season. Some also offer free tax help after the April tax filing deadline. Service members may want to check with their installation’s legal office for more information.
Another important resource to consult is IRS Publication 3, Armed Forces’ Tax Guide [4], a free booklet filled with valuable information and tips designed to help service members and their families take advantage of all the tax benefits [5] allowed by law.
Several of these key benefits include:
- Combat pay [6] is partially or fully tax-free. Service members serving in support of a combat zone or in a qualified hazardous duty area may also qualify for this exclusion. In addition, U.S. citizens or resident aliens, such as spouses, who worked as contractors or employees of contractors supporting the U.S. armed forces in designated combat zones, may qualify for the foreign earned income exclusion [7].
- Members of the military, such as those who serve in a combat zone or are serving in contingency operations outside the United States, can postpone most tax deadlines [8]. Those who qualify can get automatic extensions [9] of time to file and pay their taxes.
- The Earned Income Tax Credit [10] is worth up to $6,935 for tax year 2022. Low- and moderate-income service members who receive nontaxable combat pay can use a special computation method [11] that may boost the EITC, meaning they may owe less tax or get a larger refund.
- Dependent care [12] assistance programs for military personnel [13] are excludable benefits and not included in the military member’s income.
- Members of the armed forces on active duty may be eligible to deduct unreimbursed moving expenses [14] if their move was due to a military order and permanent change of station. Also, allowances paid to move members of the U.S. armed forces for a permanent change of station are not taxable.
If you or your spouse are serving in the military and want more information on resources available to members of our armed forces, please contact a ShindelRock tax professional [15].