Top Five Tax Breaks to Ease the Burden for Military Servicemembers

By Alecia D. Blair, Military Saves Communications

For military servicemembers and their families, tax time can be an especially stressful time. With permanent change of station (PCS) moves, deployments and all the changes those life events involve, it’s easy for servicemembers to miss some great tax perks. Here is a list of the top five tax breaks (in my opinion) to help you maximize your tax return and breathe a little easier this tax season.

5. FREE Tax Assistance

Consider using your installation’s free tax filing service, especially if your tax return is pretty straightforward. Another option is to use the free Military OneSource online tax filing service, available to eligible servicemembers.

4. Don’t Forget to Deduct Expenses
Don’t forget to know and claim your military-related deductions! According to Ethan Ewing, Military.com, any permanent change of station (PCS), travel, transportation and education expenses left unreimbursed by the military may be deducted. Many of these deductions also apply to National Guard & Reserves, (thanks to USAA via Military.com), so keep all receipts handy and organized.

3. There’s an Exception for That
Take advantage of every tax time exception available to servicemembers and their spouses. Military.com (courtesy of USAA) offers a list of these exceptions. Here are a few:

Are you returning from a deployment to a combat zone and concerned about the looming tax deadline? Rest assured, time is on your side. You can apply for extensions for tax filing, paying taxes, claiming refunds and even contributing to your IRA.

Military spouses! Did you know that under the Military Spouses Residency Relief Act, you can choose the previous state you lived in for tax filing purposes? If your previous state had lower or no income tax that could mean more savings for you.

And if you are currently deployed or on temporary duty (TDY), your spouse can submit your joint tax returns using a power of attorney, rather than waiting for you to sign.

2. Earned Income Tax Credit

Don’t overlook the Earned Income Tax Credit (EITC), “a refundable federal income tax credit for low- and moderate-income working individuals, couples and families,” according to Laura Roler, Military Saves. If you qualify for this tax credit, the money you receive from it may be used to kick start an emergency fund! Determine your eligibility and learn more about EITC today.

1. Tax-Exempt Income
Did you serve in a combat zone during 2015? If so, your income may be tax-exempt, according to Ethan Ewing, Military.com. That exemption may also apply to reenlistment bonuses and other types of income earned in a combat zone. For all the details, you can also visit the IRS tax information for members of the military.

Use these tax tips to make tax time less stressful, maximize your return and save money. And don’t forget, once you’ve received your refund, prepare for military life’s surprises with your tax return.

Set a goal. Make a plan. Save automatically.

Tip of the Day

  • Written by Guest Blogger | March 13, 2014

    Start an emergency fund by saving $10/week or $40/month to save $500 by the end of the year http://ow.ly/rswS2

Saver Stories View all »

How Smart Financial Decisions Can Create Opportunities 

Written by | November 22, 2019

Written by Stephen Ross, America Saves Program Coordinator | November 22, 2019

Of the many stories Military Saves shares, most describe how someone was in dire straits financially and worked their way out of it with the help of Military Saves. This time we want to highlight a different kind of story. This is a story about how responsible financial decisions can build on one another to create opportunities you thought only the super-rich enjoy.

Read more...

Making Saving Automatic Leads to Personal Success

Written by Lila Quintiliani | May 27, 2020

Ryan’s savings journey started when he was an active duty airman. Frequent deployments and temporary duty assignments gave him the opportunity to save. By the time he transitioned out of active duty, he had built up a healthy rainy-day fund and had started to aggressively save for retirement.

Read more...

Setting a Goal Leads to Success

Written by Super User | May 24, 2019

Growing up, Marisa’s dad had always talked about saving first, but she said she didn’t really internalize it until much later. “I was drifting along with no plan, carrying a little bit of revolving debt, saving some money here and there, but without a real plan for it.”

Read more...