Happy Veterans’ Day: Tax Breaks for Our Military

Tax Deductions and Credits American Flag Against a Blue Sky

Veterans Day was originally called Armistice Day, and it commemorated the end of fighting in World War I. Rechristened Veterans Day in 1954, it is now the day we honor American veterans of all wars.

Because of the extraordinary contributions military members and their families make to our country with little financial reward, Congress has given them special tax benefits to reduce their financial burdens. But those tax breaks don’t do service members much good if they don’t know about them. So in honor of Veterans Day, here is a list of some of the commonly missed tax benefits for military:

 Moving expenses. If you are on active duty and have a permanent change of station, unreimbursed moving expenses you incur in connection with that change in station are tax deductible. Even if you are out of the military, you may qualify for a moving expense deduction if your move is related to the start of a new job in a new location.  TurboTax will walk you through the process to determine if you qualify.

Travel expense for reservists. If you are in the National Guard or military reserve, you may be able to deduct your travel expenses. If you travel more than 100 miles from home and are away overnight, you can deduct your lodging, half of the cost of meals, 56 cents per mile for vehicle expenses, plus toll fees and parking.

Combat pay. If you are serving in a combat zone, your pay is not taxable to you (for military officers the tax-free pay is subject to a cap). But even though your combat pay isn’t taxable, it still can be taken into account to enable you to qualify for the Earned Income Tax Credit.

ROTC payments. ROTC students don’t have to pay tax on the allowance that they receive when they participate in advanced training, unless they receive pay for being on active duty.

Military uniforms. For uniforms that you are prohibited from wearing when off duty, you can deduct any unreimbursed expense you have for the cost of the uniforms, including their cleaning and upkeep.

Filing your tax return. Those serving in a combat zone during tax filing season, or hospitalized because of injuries sustained in a combat zone, have 180 days (almost six months) beyond the April 15 deadline to file their federal tax returns.

If you are serving overseas in a non-combat zone, the April 15 deadline is automatically extended to June 15. These rules even extend to civilians serving in a combat zone who write “Combat Zone” and their deployment date in red across the top of their tax return. (Military members do not have to make this notation on their tax return.) And for those who are serving in the military and not available to sign a joint return, the spouse can sign it under a power of attorney.

You don’t have to know all of these tax laws.  TurboTax will ask simple questions about you and give you the tax deductions and credits you’re eligible for.

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