Video: 2011 Tax Credits for Deployed Soldiers
Note: The tax credits described in this video are applicable to tax years 2009 through 2011.
Hello, I’m Tammy from TurboTax with some information for taxpayers serving in the military. As a member of the military, you can take any tax credit that’s available to non- military taxpayers—provided you qualify for it. However, if you are required to serve outside of the United States, the IRS provides some special rules that may just make you eligible for additional tax credits.
Two of the biggest concessions the tax law makes for deployed soldiers are an extension of the deadline to qualify for the first-time homebuyer credit and the earned income credit. The first-time homebuyer credit reduces your tax bill on a dollar-for-dollar basis by the smaller of $8,000 or 10 percent of the purchase price of your home. However, the home you purchase must be your principal residence and not a vacation home or rental property.
If you were deployed outside of the U.S. for at least 90 days between January 1, 2009 and April 30, 2010, the IRS gives you more time than other taxpayers to enter into a contract and complete the purchase of your home in order to qualify for the first-time homebuyer credit. This requires that you had entered into a contract to purchase your home on or before April 30, 2011 and closed no later than June 30, 2011.
For other taxpayers, the first- time homebuyer credit isn’t available after 2010. Another beneficial credit is the earned income credit. This credit is refundable, meaning it can provide a tax refund even if you don't owe any taxes.Typically, taxpayers who report their dependent children must reside with them in the U.S. for more than half of the tax year.
However, another exception exists for military personnel who are stationed outside of the U.S. for an indefinite period or more than 90 days. For purposes of the earned income credit, the IRS treats the period that you and your family are abroad as a temporary absence —meaning you are treated as residing in the U.S. the entire time. This exception also applies if you are outside of the U.S. while your family remains at home. In other words, you are considered to be living with your children in the U.S. despite being deployed abroad.
Remember, when you file with TurboTax, we’ll ask you simple questions and determine which deductions and credits you qualify for. For more information about this and other tax topics, visit TurboTax.com.