Military Personnel Tax Tips
Those who serve in the U.S. armed forces are honored with a number of benefits, ranging from education assistance to retirement. Among the perks are a number of steps to make filing federal income tax returns easier, as well.
Key Takeaways
- If you move yourself and your family because of a permanent change of station, you may deduct what the IRS calls “reasonable unreimbursed expenses” using Form 3903.
- If you’re an active reservist who travels 100 or more miles from home to reserve duty, you may deduct unreimbursed travel expenses and take the standard mileage rate for driving.
- You may be able to deduct expenses for job-hunting incurred during programs for transitioning between military service and civilian life.
- Members of the US Armed Forces who serve in combat zones may exclude certain pay, referred to as “combat pay,” from their income.
The "Armed Forces' Tax Guide"
While most service members file the shortest, simplest tax forms, others have to complete additional forms and schedules so they can take advantage of subtle differences in tax law pertaining only to service members. Internal Revenue Service Publication 3, "Armed Forces' Tax Guide," details special tax situations for those serving in the Army, Navy, Air Force, Marines or Coast Guard.
Moving expenses
Each branch of the military typically pays for the relocation of those members who aren’t married or don’t have families. If the service member is married, the government often provides the vast majority of standard relocation costs. The rest can be reimbursed or deducted on your taxes, depending on the situation.
Active duty service personnel who move themselves and their families because of a permanent change of station may deduct what the IRS calls “reasonable unreimbursed expenses” using Form 3903.
Uniform upkeep
All branches of the military issue uniforms to their members that they are required to wear and typically provide them with a monthly clothing allowance for regular upkeep. For tax years prior to 2018, uniform expenses that exceed that allowance may be deducted as an unreimbursed employee expense subject to 2% of your adjusted gross income, if you itemize your deductions.
Beginning with tax year 2018, these unreimbursed employee expenses are no longer deductible.
Because service members are not required to wear their dress uniforms, except for special occasions:
- they are not considered a standard uniform.
- they would not typically qualify for reimbursement.
- if a special circumstance requires the service member to wear a dress uniform, the additional costs may be an itemized deduction.
Reservists and ROTC students
Active reservists traveling 100 or more miles from home to reserve duty may deduct unreimbursed travel expenses, such as costs associated with lodging and meals, using Form 2106. They may also take the standard mileage rate for driving. These expenses are considered unreimbursed employee expenses are not deductible as of the 2018 tax year.
ROTC students who receive subsistence allowances for participating in advanced training aren't taxed for that allowance, but active-duty payment for events such as summer advanced training camp is taxable.
>TurboTax Tip:
In honor of our nation's military personnel, all enlisted active duty and reserve military can file free federal and state taxes with TurboTax Online using the TurboTax Military Discount.
Life transitions
The military offers service members a civilian life transition program to help them prepare for life after the military. Some costs—such as expenses for job-hunting—incurred during these programs for transitioning between military service and civilian life may be deducted. Deductible expenses include those incurred for travel, resume preparation and job placement fees.
These expenses are also considered unreimbursed employee expenses are not deductible as of the 2018 tax year.
Deadline extensions
Service members who serve in a combat zone are allowed extra time without penalty to take care of their tax filing matters. The IRS offers an automatic 60-to-180-day extension for qualifying members of the military, especially those serving in a combat zone, for:
- filing tax returns
- paying taxes
- filing refund claims
Even though the extension is automatic, military personnel are still required to submit some documents and forms to the IRS in order to file for the extension.
Combat zone exclusions
Members of the U.S. Armed Forces who serve in combat zones may exclude certain pay, referred to as “combat pay,” from their income. The IRS allows enlisted members, warrant officers and commissioned warrant officers to exclude various forms of pay, including:
- active duty pay earned in any month served in a combat zone
- imminent danger/hostile fire pay
- re-enlistment bonuses if voluntary re-enlistment occurred during a month while serving in a combat zone
- pay for accrued leave earned while serving in a combat zone
- pay while hospitalized as a result of your service in a combat zone
Commissioned officers also may exclude part of their combat pay, but their exclusion is capped at the highest rate of enlisted pay—plus extra pay for imminent danger or hostile fire.
Enlisted active duty and reserve military can enjoy TurboTax Online for free
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