Veterans Day is a day of celebration and remembrance for all of the Veterans who served our country and those military members still serving our country. In honor of our military members and their families, we would like to share 7 tax savings available for military families.
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). However, even though your combat pay isn’t taxable, you can still count the income to qualify for the Earned Income Tax Credit.
Military uniforms. One big expense for military members is uniforms. Military uniforms and utility uniforms that cannot be worn off duty as well as reservists uniforms that can only be worn while performing reservists duties are tax deductible if you were not reimbursed for your expenses. Also don’t forget epaulets, corps devices, and swords that you purchased for military activities.
Trade publications. Any military and defense-related publications that you purchased during the year may be tax deductible.
Home office and storage. Many commanders and first sergeants in the military need to use a portion of their home to plan military activities and store equipment and uniforms. If you use a portion of your home for military activities you may be able to take the home office deduction where you can deduct a portion of expenses like mortgage or rent, utilities, and property taxes based on the portion of your home used for those activities. Our you may be able to take the simplified home office deduction worth up to $1,500.
Moving expenses. If you are on active duty and have a permanent change of station, unreimbursed moving expenses in connection with that change 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
Deadline extension. If you serve in a combat zone during tax filing season or hospitalized because of injuries sustained in a combat zone, you are extended at least 180 days after leaving the designated combat zone.
Thrift savings plan. Enrolling in the Thrift Savings Plan (TSP) is the best way to save both money and taxes! Your contributions to your Thrift Savings Plan are made tax free and the growth in your TSP account is tax-deferred, meaning you won’t pay taxes on the TSP until you take your money out, ideally in retirement.
However, come tax time, you don’t have to know any of these tax laws. TurboTax will ask simple questions about you and give you the tax deductions and credits you’re eligible for based on your answers.