November is Military Family Appreciation Month, a time when America honors and recognizes those unique sacrifices and challenges family members face in support of their loved ones serving our great nation. Members of the U.S. Armed Forces have special situations that may affect their tax return. At Anderson, Adkins & Company, we want to make sure that military families get the tax breaks they deserve. These are some of the more common benefits we see.
Tax-Free Income & Benefits:
The most common tax-free items are combat pay, housing allowances, group-term life insurance, uniform allowances, moving and travel allowances, professional education, family allowances, or death allowances. The tax-free housing allowance is a monthly subsidy covering all or part of your monthly rent or mortgage payment as long as you’re in the military.
Some of the retirement benefits include the ability to contribute tax-free combat pay into a ROTH retirement account, meaning your contributions as well as your earnings come out tax-free, a double tax benefit. Additionally, service members have access to the Thrift Savings Plan (TSP), one of the lowest-cost retirement savings plans around.
State Tax Breaks:
Active service members can legally maintain residence in one state even if they are stationed in another. If your legal residence, or domicile, is a state that has no income tax, you can be shielded from taxes if you move to another state while on active duty. This also applies to spouses.
Armed Forces Reservist Travel Deductions:
National Guard members or Armed Forces reservists can deduct the amounts spent for work-related travel, lodging, and meals when traveling more than 100 miles and stay overnight.
When you’re serving overseas, you automatically have an extension of time to file your tax return and even more time if you’re serving in a combat zone. Additionally, you won’t accrue interest or penalties during this extension.
Are you a military family? Let us help you.
Please contact our office today at 706-288-2000 to discuss your specific situation. As always, planning ahead can help you maximize your family’s financial situation and position you for greater success.