Celebrate Armed Forces Day with These 4 Military Savings Tips

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To our members of the U.S. military: We appreciate all that you do serving our country. Today, in honor of Armed Forces Day, we share some military-focused tax tips.
Combat Pay Exclusion
If you serve in a designated combat zone, certain types of income are not taxable. This exclusion is determined on a month by month basis. To exclude the income, the month that you are paid for must be a month when you were in a combat zone (or were hospitalized due to serving in a combat zone.) But be careful when figuring out which months count and which do not, as the definition is a generous one. Being in a combat zone for at least one day in a given month is all that is required to qualify for the entire month’s exclusion.
Save Today and for Tomorrow
Enrolling in the Thrift Savings Plan (TSP) is the best way to create a forced savings program – and save on taxes! Your “contributions” (which is just a more way of saying your “savings”) are made before they are taxed. Furthermore, 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.
Another, even more aggressive option for saving for your future, is the Roth TSP. While you forgo a tax-free contribution, the growth of your account occurs tax-free, meaning you won’t pay tax on the TSP account balance when you take it out at retirement.
Deadline Extensions
As the normal April 15 filing deadline date approached, some military members found themselves in a combat zone, hospitalized as a result, or in a contingency operation. Fortunately, the IRS realizes you appropriately had far more pressing things on your mind. As a result, your deadline for filing may be extended until at least October 15. Quite possibly, it may be extended longer depending on the timing of your exit from the military situation which triggered the extension in the first place.
Moving Expenses
Civilians must meet certain time and distance tests to deduct their moving expenses. Active duty members of the military who must move due to a permanent change of station, are not subject to either the time or the distance test. If you move because of a permanent change of station, you can deduct your reasonable unreimbursed moving expenses.
The tax deduction is limited to unreimbursed expenses you pay to move your household and your family. That means that any house-hunting trips and food on your moving trip are excluded. Reasonable lodging en route and temporary storage is permitted, however.

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