Making Your Way

Tax Breaks for Military Members and Their Families

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Being in the military (or being part of a military family) means sacrifice, both personal and financial, and military members know what they will have to relinquish in order to serve their country. The government realizes these sacrifices should not be made in vain, however, and therefore offers exclusive tax-preparation help, tax deductions, and tax breaks for military members and their families.

Tax Preparation

  • Free tax advice. Military members and their families can receive free tax help and preparation services through the Volunteer Income Tax Assistance Program.
  • More time to file. Serving in a combat zone may qualify members for a tax-return extension of up to 180 days. This means more time to file a tax return and more time to pay any taxes owed.
  • Ability to choose in which state to file. With the Military Spouses Residency Relief Act, military spouses are able to choose to file state tax returns in either their previous state or the state in which their family is currently stationed. A military family can save a good amount of money if one of these locations has lower income tax rates.

Tax Deductions

  • Travel. Members of the National Guard and Reserves may be able to deduct any unreimbursed travel costs if they’re asked to travel more than 100 miles from home.
  • Uniforms. Members of the National Guard and Reserves may be able to deduct the cost of uniforms past what is normally reimbursed.
  • Waived tax penalties. Members of the National Guard or Reserves may be able to get penalties waived if they need to take funds out of a retirement plan as a result of being called to active duty. Income tax on withdrawals still applies, however.

Tax Breaks

  • Tax-free time. One of the big tax breaks for military personnel? Enlisted service members and warrant officers who serve in a combat zone for a whole or partial month are free from federal taxes for that whole month.
  • Selling a home. Military members often have to move many times throughout their careers. If the home they are selling was their principal residence for two out of the five years before a move, then they may be able to exclude up to $250,000 in capital gains taxes for individuals or up to $500,000 for married couples.
  • Moving. Active-duty military members who move because of a permanent station change may be able to deduct “reasonable unreimbursed expenses” related to moving, according to the Internal Revenue Service.

These are just some of the many benefits that active and veteran military members are eligible for. While nothing could properly acknowledge these dedicated citizens for the sacrifices they make every day, there is at least some small comfort in knowing these tax breaks and deductions will make their lives, and those of their families, a little easier both while they are away and once they make it back home.