Tax Deductions for Service Members

Death and taxes need not be the only two things in the world that are for sure. A tax return is a close third for anyone who knows how to properly file their taxes, and it can be the difference between a payment due notice and a hefty return. This article is dedicated to breaking down the confusion and ensuring that this tax season, you take advantage of all available tax perks and breaks open to service members. While this is not an exhaustive list, it will hit on many of the common and yet so often confusing tax advantages.

Earned Income Tax Credit:

During the 2014 tax season, did you make less than $46,997 (or $52,427 if married and filing jointly)? If so, and you have 3+ qualifying children ($43,756 single / $49,186 jointly), or 2 qualifying children ($38,511 single / $43,941 jointly), or 1 qualifying child ($14,590 single / $20,020 jointly), then you qualify for this tax credit. Remember this is based off of taxable income, so if you were deployed, it is only the taxable income that will count towards this amount. Check your W-2 accordingly.

Standard Mileage Rates:

Are you driving your personal vehicle for work related needs? Keep track of the mileage and you can claim up to $0.56 per mile. If you use your personal vehicle for transportation related to medical care or a PCS move, it is $0.23 per mile.

Moving Expenses:

Most taxpayers have to meet distance and time requirements as part of a move. However, for service members on PCS orders, the move does not need to meet those requirements. This includes an initial move from home of record to the first active duty post, a move from one base to another, or a move to your home of record or a nearer point upon completion of federal service within one year of completing your service.Tax Side

Payments for moves from the military, the storing of household goods, dislocation allowances, temporary lodging, and move-in housing allowances do not get added to your income for tax purposes.

You can deduct moving expenses that were not reimbursed by the military:

  1. The cost for storing and insuring of household goods can be deducted for the first 30 days after your arrival at a new location.
  2. The cost for lodging, airfare, and car expenses as either $0.23 per mile or actual out of pocket expenses for fuel. This includes parking fees and tolls but you cannot include the cost of meals.

Combat Zone Exclusions:

Combat zones are those areas identified by the President in an executive order, those areas identified by Congress to receive hostile fire pay or imminent danger pay, or an area outside of these regions which the DOD certifies is in direct support of these activities.

Enlisted service members and warrant officers can exclude from their income their active duty pay, imminent danger/hostile fire pay, reenlistment bonuses if performed during their time in a combat zone, and any payments for accrued leave.

Itemized Deductions:

Deductible business expenses are reimbursable to 2% of the adjusted gross income.

Transportation expenses can be deductible if used for going from one workplace to another or traveling to another place for a meeting. This is not the same as going from your home to your normal place of work.

Professional dues can be deducted if related to your military profession. These are the societies, clubs, and cup and flower funds that are generally owed when you arrive to a unit.

Education costs can be deducted if they are required by the employer or improve skills that are needed in the current field.

Tax Credits:

Child tax credit is available for qualifying children under the age of 17 in 2014 and can reduce your tax by $1000 for each qualifying child.

Disability Benefits:

These expenses should not be included in gross income to include disability compensation, grants or payments to make homes wheelchair accessible.

So, when you are filing your taxes this year, make sure to properly identify what you are entitled to and ensure that the supporting documentation is available. It is your money; make sure it goes to the right place!

Disclaimer: The content in this article is the opinion of the writer and does not necessarily reflect the policies or opinions of US Patriot Tactical.

Kyle Soler

Kyle Soler is an active duty Infantry Officer serving in the US Army. He has served in the military for more than 10 years, working his way from an Infantry Squad Leader to a Company Commander with multiple combat deployments to both Iraq and Afghanistan in between. Kyle earned his bachelor’s degree in History from Willamette University, and three Master degrees from Jones International University in Information Security Management, Health Care Management, and International Business. He also holds certifications in Six Sigma Lean and Six Sigma Lean Black Belt. His primary focus is realigning organizational priorities to get the most out of the time available in terms of training and development. Prior to entering military service, he worked as a fire fighter and an EMT. His areas of knowledge include military, training, leadership, disaster and continuity planning.
Kyle Soler

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