10 Tax Breaks You Can Get as a Military Family

April 4, 2023
10 Tax Breaks You Can Get as a Military Family

With Tax Day fast approaching, procrastinators (such as myself) are scrambling to get their taxes in, and happily anticipating their yearly refund.

TurboTax and H&R Block are popular services through which users can quickly and easily file their taxes. However, the fastest approach may not always be the best one. Before filing, you should assess your life and means of income for all eligible tax breaks.

A “tax break” is a reason for which the government will reduce your taxes — meaning you get a higher refund. The most common tax break, for example, is an itemized deduction. When filing for itemized deductions, you may be able to lower your tax bill by listing any charitable contributions, medical and dental expenses, personal casualty losses and more.  

Military families will find that they qualify for more tax deductions than they think. Here are 10 military tax breaks that you could be eligible for:

1. Death benefits

The death gratuity paid to survivors of deceased Armed Forces members is $100,000 and is not taxable, effective for deaths occurring after 9/10/2001.

2. Sale of principal residence

A taxpayer on qualified official extended duty may suspend the five-year ownership-and-use period before the sale of a residence for up to 10 years. This applies when the duty station is at least 50 miles from the residence – or while the person is residing under orders in government housing – for a period of more than 90 days or for an indefinite period. This election, which is an option for the taxpayer, applies to only one property at a time.

3. Deduction for overnight travel expenses

Reservists and Guard members who stay overnight more than 100 miles away from home while in service (e.g., for a drill or meeting) may deduct unreimbursed travel expenses (transportation, meals and lodging) as an above-the-line deduction. The deduction is limited to the rates for such expenses authorized for federal employees, including per diem in lieu of subsistence. Taxpayers use Form 2106 or 2106-EZ to figure the deduction amount and enter it as an adjustment to income on Form 1040, line 24.

4. DoD Homeowners Assistance Program

Payments made after November 11, 2003, under this program to offset the adverse effects on housing values of military base realignments or closures will be excludable from income as a fringe benefit.  Additionally, payments to military members are also not subject to social security or Medicare taxes.

5. Extension for contingency operations

The various extensions granted to combat zone participants to file returns or pay taxes will also apply to those military members serving in contingency operations outside the United States, as designated by the Secretary of Defense.

6. Dependent care assistance programs

Dependent care assistance programs for military personnel are excludable benefits and not included in the military member’s income.

7. Military academy attendees

The 10% tax on payments from a Qualified Tuition Program or Coverdell Education Savings Account that are not used for educational expenses does not apply to attendees of the U.S. Military, Naval, Air Force, Coast Guard or Merchant Marine Academies, to the extent the payments do not exceed the costs of advanced education.

8. Extension of your filing deadline

If you’re serving outside the U.S., you can get an automatic two-month extension. For another four months, just file Form 4868 by June 15.

If you or your spouse is serving in a combat zone, a contingency operation outside the U.S., or have qualifying service outside a combat zone, you can get the lengthiest possible extension. Initially, you have 180 days after your last day in a combat zone, contingency operation of other qualifying service, or following your last day of hospitalization because of injuries sustained during your combat, contingency or qualifying duty

9. Non-taxable wages

  • Combat pay (compensation for active service while in a combat zone)
  • Certain educational expenses for dependents
  • Uniform allowances
  • Housing and cost-of-living allowances abroad paid by the U.S. Government or by a foreign government
  • Certain moving and travel allowances – if unreimbursed such as pet moving expenses
  • Medical and dental care benefits

10. Uniform deduction

Not only does your uniform allowance get excluded from your gross pay, you may also be able to write off some of the cost of some uniforms. If you have uniforms you can’t wear when off duty, the IRS allows you to deduct the costs of buying and maintaining those uniforms. But you’ll need to reduce the deduction by any nontaxable allowance or reimbursement you already got for the uniforms.

The laws around taxes change constantly, so before filing, do your research on the military tax breaks available to you for that year. Good luck, and get filing, folks!

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