IRS Audit, IRS Audit Help, IRS Tax Problems, Military

Military Tax Benefits

November 13, 2013 - IRS Audit, IRS Audit Help, IRS Tax Problems, Military

Attention Military Members: Internal Revenue Service gives special tax treatment to our Military! … I am grateful for the sacrifices of our military veterans. This week we remembered them on Veterans’ Day. … My father and my uncles all served in World War II. My schoolmates served in the Vietnam War. Many of my clients have served or are still serving in our military today. You and your families sacrifice so much to protect us. Thank you so much for your service. I am happy to help remind you of these tax benefits available to you. … Americans are taxed on their worldwide income and you are taxed on most of your income, too. But there are some specific incomes that are excludable, or not taxable. … Military pay you earn while serving in a designated combat zone is not taxable. When you are outside the United States you are allowed an extra two months if you choose to file an extension of time to file your return. If you are serving in a combat zone you have even more time. There is a complicated formula used to figure the exact number of extra days you can use. The same caution applies to everyone filing an extension: taxes not paid by April 15th will incur interest and may also incur penalties. So get those taxes paid early to avoid those extras. … If your spouse is unable to sign the tax return because they are serving in a combat zone. you are allowed to sign the return for your spouse. Most of my client spouses have power of attorney, often referred to as POA. If you do not have a POA, and you sign for your combat-zone serving spouse, attach a letter with the return explaining this. … The basic allowances for housing and subsistence are not taxable. If you own your home and pay real estate taxes, those taxes paid are still deductible even though you get the tax-free housing allowance. … Most people who have a job-related moving expense have to meet certain time and distance requirements. These requirements do not apply to military moves. Your new location does not have to be more than 50 miles from your last assignment. You do not have to stay employed in the new location for at least 39 weeks in the 52 weeks following your move. … If you receive disability pay for a combat-related injury, that disability income is not taxable to you. … If you are on full-time active duty, you generally may not deduct your uniform expenses. But if you are serving as a reservist, you DO get to deduct any uniform expense that is more than the uniform expense reimbursement you receive. … Just like any mileage to a second job on one day, reservists may also be allowed to deduct the cost of their transportation to meetings they attend on the same day after working their regular job.