Military Taxes

Straight from the IRS: Taxation of Military Service and Residency

Members of the military are usually taxed in their state of legal residence rather than in the state where they’re stationed. You usually must prove you reside and intend to continue residing in a state to establish legal residence. However, each state has its set of rules for proving your intent to legally reside in a state. You can help prove your residency by:

  • Getting or keeping your driver’s license
  • Registering your vehicles.
  • Paying state taxes, like income or property taxes
  • Registering to Vote

Due to the Military Spouses Residency Relief Act in 2009 (MSRRA), spouses of military members are now taxed much the same as military members. Under this act, military spouses can maintain their original states of residence. This is true even though they move to states where their spouses are stationed.

These Requirements Must Be Met

  • The spouse accompanies the military member to a duty-station state outside the home state. The military member must be obeying military orders.
  • The spouse is in the duty-station state solely to be with the military member.
  • The spouse is a legal resident of the same home state as the military member.

Earned Income Tax Credit

Many Veterans are eligible for various tax credits including the Earned Income Tax Credit, a refundable federal income tax credit for low- to moderate-income, working individuals, and families. To qualify, you must meet certain requirements and file a tax return, even if you do not owe any tax or are not required to file a tax return

Special Tax Considerations

Veterans may be eligible to claim a federal tax refund based on:

  • An increase in the Veteran’s percentage of disability from the Department of Veterans Affairs (which may include a retroactive determination) or

  • The combat-disabled Veteran applying for and being granted, Combat-Related Special Compensation, after an award for Concurrent Retirement and Disability.

For federal tax purposes, the U.S. Armed Forces include officers and enlisted personnel in all regular and reserve units controlled by the Secretaries of Defense, the Army, Navy and Air Force. The Coast Guard is also included, but not the U.S. Merchant Marine or the American Red Cross. However, these and other support personnel may qualify for certain tax deadline extensions because of their service in a combat zone.


The Top 10 Special Tax Benefits for Armed Forces

Qualifying military members, including those who serve in a combat zone, can postpone some tax deadlines. This includes automatic extensions of time to file tax returns and pay taxes.

If you serve in a combat zone, you can exclude certain combat pay from your income. You won’t need to show the exclusion on your tax return because qualified pay isn’t included in the wages reported on your Form W-2 and Tax Statement. Some service outside a combat zone also qualifies for this exclusion.

You can choose to include nontaxable combat pay as earned income to figure your EITC. You would make this choice if it increases your credit. Even if you do, the combat pay remains nontaxable.

If you move due to a permanent change of station, you may be able to deduct some of your unreimbursed moving costs.

You can deduct the costs and upkeep of certain uniforms that regulations prohibit you from wearing while off-duty. You must reduce your expenses by any reimbursement you receive for these costs.

Both spouses normally must sign joint income tax returns. However, when one spouse is unavailable due to certain military duty or conditions, the other may, in some cases, sign for both spouses, or they may need a power of attorney to file a joint return.

If you are a member of the U.S. Armed Forces Reserves, you may deduct certain travel expenses on your tax return. You can deduct unreimbursed expenses for traveling more than 100 miles away from home to perform your reserve duties.

Educational and subsistence allowances paid to ROTC students participating in advanced training are not taxable. However, active duty pay – such as pay received during summer advanced camp – is taxable.

Members of the military count tax-free combat pay when figuring how much they can contribute to a Roth or Traditional IRA.

After leaving the military, you may be able to deduct certain job hunting expenses. Expenses may include travel, resume preparation fees and job placement agency fees. Moving expenses may also be deductible.

You can learn more about these tax benefits in Publication 3 Armed Forces’ Tax Guide, available on the IRS.gov web site. To make sure you get all the deductions and credits you’re entitled to, the National Association of Enrolled Agents (NAEA) recommends you speak with a licensed tax practitioner. Enrolled agents (EAs) receive their licenses from the Department of the Treasury after passing a background check and a stringent three-part exam on taxation. They are the only federally licensed tax practitioners with unlimited rights of representation before the IRS. Contact your local Enrolled Agent, Jeffrey Schneider, EA, NTPI Fellow at [email protected],  SFS Tax & Accounting Services, in Royal Palm Beach or Port St Lucie.

Taxation of Military Service and Residency

Members of the military are usually taxed in their state of legal residence rather than in the state where they’re stationed. You usually must prove you reside and intend to continue residing in a state to establish legal residence. However, each state has its set of rules for proving your intent to legally reside in a state. You can help prove your residency by:

  • Getting or keeping your driver’s license

  • Registering your vehicle(s)

  • Paying state taxes, like income or property taxes

  • Registering to vote

Due to the Military Spouses Residency Relief Act in 2009 (MSRRA), spouses of military members are now taxed much the same as military members. Under this act, military spouses can maintain their original states of residence. This is true even though they move to states where their spouses are stationed.

These requirements must be met:

  • The spouse accompanies the military member to a duty-station state outside the home state. The military member must be obeying military orders.

  • The spouse is in the duty-station state solely to be with the military member.

  • The spouse is a legal resident of the same home state as the military member.

Veteran’s Benefits Explained

In addition to the pensions and benefits to which you may be entitled because of both public and private employment, you may also be eligible for additional benefits. Click here to read about the benefits you may be entitled to based upon your military service.

Florida State Veteran’s Benefits

The state of Florida provides several veteran benefits. This section offers a brief description of each of the following benefits.

Warrior Pose — One way to help veterans with PTSD? Lots of yoga.

Yes, we are a Tax & Accounting firm and yes, and there are only three days left until tax season officially ends on April 15th, but useful and possibly life altering information does not always come at the most convenient time, and it not always about facts and figures that relate to veterans tax needs. It is also about healing hearts, lifting spirit, sharing hope and other ways of with coping with PSTD and stress. I cannot begin to understand the trauma and despair that our vets experienced in combat, as I have never served, but I can attest to the value of yoga and how it is teaching me to control my stress level.

The attached article can be found in the Washington Post and thought I should share the information. I have also posted it on our facebook.com/SFSTax.  Please feel free to “Like” us while you are there.