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Tax Tips Made for Military Life

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MilTax’s tax preparation and e-filing software is available from mid-January through mid-October. And MilTax consultants are available year-round to help with your tax questions.

As a service member, the tax implications of combat pay, deployment or multiple moves can be daunting. Military OneSource MilTax services — designed specifically for the MilLife — can make tax time easier and help maximize your tax refund.

With MilTax, service members have quick access to tax consultants who can answer your questions about the tax code and how it applies to military life, as well as easy, free and secure preparation and tax filing software. All MilTax services are 100% free with no hidden surprises, so take advantage of MilTax to save money and time this tax season.

Before filing, organize paperwork and establish a specific place for all incoming tax documents, like W-2 forms, as they arrive in the new year. You may need to track down others. You’ll also need Social Security numbers, birth dates and other information for everyone included in the return.

Take a look at your Leave and Earnings Statement withholding to see if federal income tax withholding will unexpectedly fall short of your tax liability for the year. You can check this by using the Tax Withholding Estimator on IRS.gov.

Not sure of all the documentation you’ll need? Contact a MilTax consultant for free help on which documents you’ll need to file for your specific situation.

If you or your spouse received unemployment compensation, you must report it as income on your tax return. You will receive a 1099-G in the mail that states your total received.

Go to the IRS’s Tax Exempt Organization Search to find out whether the charities you gave to qualify.

Stuck? Questions? Unsure of the next step? Let MilTax take the stress out of tax season. Military OneSource’s tax consultants can answer your questions, and our free tax preparation and e-filing software makes filing your returns fast and simple.

Call 800-342-9647 or live chat 24/7 to schedule an appointment with a MilTax consultant to get answers to your tax questions. OCONUS/International? Click here for calling options.

For tax year 2022, the standard deduction for single taxpayers is $12,950. For married filing jointly, the standard deduction is $25,900 and for heads of households, the standard deduction is $19,400.

The IRS allows you to take certain tax credits on your tax returns, including:

  • The Lifetime Learning Credit is for qualified tuition and related expenses paid for eligible students enrolled in an eligible educational institution. The LLC can help pay for undergraduate, graduate and professional degree courses – including courses to acquire or improve job skills. There is no limit on the number of years you can claim the credit. It is worth up to $2,000 per tax return and applies to 20% of the first $10,000 of a taxpayer’s out-of-pocket expenses.
  • The Earned Income Credit, up to $6,935 in 2022, for taxpayers filing jointly who have three or more qualifying children; check out income and credit amounts.
  • The maximum credit allowed for adoptions is the amount of qualified adoption expenses up to $14,890 in 2022. This credit is nonrefundable, which means it’s limited to your tax liability for the year. However, any credit in excess of your tax liability may be carried forward for up to five years.

While the IRS allows taxpayers who itemize to deduct a range of expenses, alimony payments were no longer deductible starting in tax year 2019; the recipient does not have to report alimony as income any more either.

Meanwhile, one exclusion common among military families is the foreign earned income exclusion, which is up to $112,000 for tax year 2022.

For more information about these or other credits, deductions or exclusions, contact a MilTax consultant about your specific situation.

Active-duty service members have always been able to keep one state as their state of legal residency for tax purposes — typically their home of record — even when they move frequently on military orders. A state of legal residence is also considered their “domicile” or “resident” state.

The legislation enacted on December 31, 2018, significantly broadens the Service Members Civil Relief Act rights for spouses of military service members with respect to voting and taxation. The Military Spouse Residency Relief Act refers to section 302 of the Veterans Benefits and Transition Act of 2018 and allows for spouses to elect to use the same legal residence as the service member during any taxable year of the marriage, regardless of which state they currently reside.

When you’re deployed, your service wants you to focus on your mission, not your tax forms. The IRS automatically extends tax deadlines for U.S. Armed Forces personnel deployed to a combat zone or in support of operations in a qualified hazardous duty area.

The deadline for filing returns, making payments or taking any other action with the IRS is also extended for at least 180 days after the last day the service member leaves the qualifying combat zone service or the last day of any continuous qualified hospitalization for injury from service in the combat zone.

Many military families buy a home knowing they may have to sell it when their next PCS comes around. It’s important to know about capital gains tax ahead of time.

If you make a profit from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income, or up to $500,000 of that gain if you file a joint return with your spouse. This is called the Sale of Primary Home Capital Gain Exclusion.

To be eligible for this exclusion, most people must have owned the home for at least two years and lived in that home for at least two of the last five years. However, service members who have moved due to PCS before being able to meet these requirements, may still qualify for an exclusion. In those cases, they may not be taxed with the total capital gain for the sale of the home.

If you have property in an area determined by the president to be eligible for federal assistance — such as a region devastated by a hurricane or forest fire eligible for assistance from FEMA — you can claim unreimbursed expenses from casualty losses on your federal tax return.

If you are eligible to claim a loss on your tax filing, use IRS Form 4684, Casualties and Thefts. Refer to IRS Publication 547 (Casualties, Disasters, and Thefts) and Publication 584 (Casualty, Disaster, and Theft Loss Workbook) for more detailed information.

Additional resources can be found on the IRS website, and MilTax consultants can help you sort out your specific tax situation for free.

If you receive a corrected W-2, or W-2C, and have filed a tax return for the year covered by the form, then file an amended tax return for the year the corrected W-2 covers. If you have not yet filed a return for the year covered by the W-2C, use the W-2C when filing your initial return.

Be aware that this W-2C is due to the repayment of the Social Security Deferral and you may NOT need to file an amended return. For more information call 800-342-9647 and let a MilTax consultant help you determine if you need to file an amended return or not.

If something doesn’t look right on your W-2:

  • Call the Military Pay customer care center at 888-332-7411 to request a corrected W-2.
  • Use AskDFAS; clickable icons are located on the myPay and Defense Finance Accounting Services homepages. FAQs are available for information and the application allows members to submit a secure message to the appropriate DFAS military pay office.

Reservists whose reserve-related duties take them more than 100 miles away from home each way, can deduct their unreimbursed travel expenses on Form 2106, even if they do not itemize their deductions.

Taxpayers can request a free transcript of tax returns covering the past three years. The Get Transcript tool on IRS.gov is the fastest way to get a transcript.

If you have any questions about special tax situations for National Guard or reservists, contact a MilTax consultant for a free consultation.

An IRA or 401(k)-type plan might mean saving for retirement and cutting taxes at the same time. Service members who contribute to a plan, such as the Thrift Savings Plan, may also be able to claim the Retirement Savings Contributions Credit, or Saver’s Credit.

IRAs are different from 401(k)s and TSPs. By the end of the year, a single person can make an IRA contribution of $6,000, or $7,000 if you are age 50 or older, or your taxable compensation for the year was less than this dollar limit. If you file a joint return and have taxable compensation, you and your spouse can both contribute to your own separate IRAs. You can contribute up to $6,000 to a spousal IRA or $7,000 if you are 50 or older.

In a 401(k) or TSP, you can contribute the maximum of $19,500. If you are 50 or older, you can make an additional catch-up contribution for as much as $6,500, for a total of up to $25,000.

There are two kinds of IRAs — traditional and Roth. The Roth is pre-taxed and can be withdrawn after the age of 59½ without penalty. The traditional is taxed at the time of withdrawal and will be penalized if you are not 59½. You can deduct your contributions if you qualify with a traditional IRA, but Roth IRA contributions are not deductible.

Taxes are complicated. Remember that our 100% free MilTax services — both our expert military tax consultants and e-filing tax preparation software — stand ready to make tax season easy for you. Call 800-342-9647 for 24/7 help. OCONUS/International? View calling options. Or live chat to schedule a consultation with a MilTax consultant or a financial counselor.

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