By Jan Wesner Childs
It’s that time of year again when all Americans, military or civilian, have one often-dreaded chore in common: Filing federal income taxes.
Active-duty military W-2 forms are due to be available Jan. 24 on myPay, the DOD’s online, automated pay system. While taxes aren’t due until April 15 (and in some cases later for those deployed or serving outside the United States), the sooner you file, the sooner you’ll get any refund coming to you – often in less than two weeks if you file electronically.
And if you think you might owe money, financial experts recommend filing as early as possible.
“At least give yourself time if you need to set up an extension or if you need to set up a payment plan,” said Kimberly Smith, a consultant for Military OneSource, the DOD’s online family service center. “You just don’t want to get to the point where it’s crunch time.”
Tax experts say there aren’t any new federal tax laws this year that specifically affect military personnel. But several benefits for service members and families are often overlooked or underutilized.
“As tax season approaches, military families have extra things to keep in mind,” according to Kathryn Morgan, a tax specialist and Air Force retiree in Louisiana. “Special tax circumstances apply to service members, and being familiar with the tax topics can help them file accurate tax returns and not overpay their taxes.”
For example, she said, tax-free combat pay can still be counted toward total income for some benefits, such as the Earned Income Tax Credit and the Child Tax Credit. Both are federal tax credits for families or individuals who fall within certain income ranges.
Morgan said the tax deduction for non-reimbursable moving expenses is among the most underutilized tax break for military families. According to the Internal Revenue Service, military personnel can claim any “reasonable” moving expenses not covered by DOD, to include the cost of transporting pets.
Morgan said these expenses do not have to be listed as itemized deductions.
All U.S. taxpayers will see a new line on their tax forms this year regarding healthcare coverage. Under the new Affordable Health Care Act, every taxpayer must have some sort of health insurance. Tricare is a qualifying healthcare plan under the act.
For example, line 61 of the standard 1040 form lists “Healthcare: individual responsibility,” followed by a box that says “Full-year coverage.” The IRS says Tricare beneficiaries simply need to check the box and they are good to go.
When it comes to state income taxes, there are varying degrees of benefits for service members. This year, Arkansas becomes the most recent state to exempt all or part of active-duty military pay for its residents. Several states also exempt retirement pay.
If all this sounds a little complicated, or if you just want to make sure you are getting the most out of your taxes, help is widely available at little or no cost to members of the U.S. armed forces worldwide.
Most bases, posts or deployed ships have a tax center, usually open around Feb. 1, manned with personnel specifically trained to file military tax returns. These services are free. Some of these also have self-service computer stations where service members can file their own taxes, but get help from one of the on-site experts if needed.
Military OneSource also offers free tax counseling and filing services, and several private tax services such as H&R Block, Turbo-Tax and others offer discounts and other special services for military personnel.
