April 15 is Tax Day, which means tax season only has a little under two months to go. The key to a successful tax season is ample preparation in advance to make sure you aren’t missing anything important. Read below for tips on how to make sure you have everything in order in these final weeks to prepare your military tax return, including which military tax exemptions to take advantage of, what paperwork you need, and how to file your taxes efficiently and stress-free.
Extensions for Filing Deadlines
Military families have many time constraints they deal with when filing their taxes. The IRS recognizes this, and provides you with multiple opportunities to extend your filing deadline for your 2019 military tax return.
By filing Form 4868,you are allowed a sixth-month extension when filing your military tax return. Just because you have filed for an extension doesn’t mean you can pay late, therefore you may face penalties if you choose to pay your taxes after the filing deadline.
If you’re serving outside of the United States, you can receive an automatic two-month extension. If you need more time, file Form 4868 by June 15th to apply for an additional four-month extension.
180+ Day Extensions
If you or your spouse is serving in one of the following, you can get the lengthiest possible extension: a combat zone, a contingency operation outside the United States, or have a qualifying service outside of a combat zone. You receive a 180-day extension after your last day or following your last day of hospitalization due to injuries sustained during any of the services previously listed. Additionally, you will receive any amount of time you had until your filing deadline prior to your service.
Special Military Tax Exemptions
Many military families have multiple types and sources of income and from their active duty. When it comes to paying taxes, military members can claim quite a few tax advantages that aren’t available to the average civilian. For tax purposes, it is important for you to understand the various types of pay and allowances that can be excluded from your gross income: if the money is not included in your gross income it cannot be included in your taxable income and therefore, is not taxable.
Combat Zone Exclusion
If you or your spouse are serving in a designated combat zone, you can exclude certain pay from your income. To be able to receive combat zone exclusion for the month, during that month you must have either served in a combat zone or have been hospitalized as a result of wounds, disease, or injury obtained while serving in a combat zone. You only need to serve in a combat zone for a one day minimum in order to qualify for these military tax exclusions.
If you, your spouse, or a dependent attended college last year, you may be eligible for another military tax exclusion. Expenses such as tuition and fees, room and board, and books, supplies and equipment may qualify for the purpose of student loan interest deduction. These exclusions can be claimed by completing Form 8917 and submitting it along with Form 1040.
If you have to move due to a permanent change of station, then you are entitled to some “reasonable” deductions such as packing and shipping costs, setting up and ending utilities, storing and insuring household goods and personal items within 30 days from when your possessions are originally moves, shipping both your car and your pets, and both mileage and tolls if you drove to your new home during the move. You can use Form 3903 to calculate your moving expense deduction and learn more about authorized and unauthorized expenses here.
You can usually deduct some portion of the contributions you make to your traditional retirement account for the year. However if you or your spouse were covered by an employer-maintained plan at any time during the year of 2019, then not all of the deductions are considered eligible.
Sale of a Home
The good news is you may not have to pay tax on all of the profit you have collected from the sale of your main home. A main home is one that is defined as having been your primary residence for more than two years. You must have also owned this home for at least two years, which is determined through an ownership test. Your main home can be a house, a houseboat, a mobile home, a cooperative apartment, or a condominium.
You can deduct work-related travel expenses that have not been reimbursed when you are traveling away from your permanent duty station. This deduction is applicable when you are away from your station for longer than an ordinary work day. Eligible expenses include business-related meals, lodging, laundry, and business phone calls. You can also deduct the cost of travel from one workplace to another, when attending a business meeting away from your regular workplace, or when you travel overnight.
Initially, your uniform allowance gets excluded from your gross pay. However, you may be able to write off some of the cost of some uniforms. If you cannot wear your uniform while off-duty, the IRS allows you to deduct the costs of purchasing and maintaining those uniforms.
Similar to any experience you’ve had at the DMV, you know filing taxes requires a lot of necessary paperwork. Here are a few items you will need to file your 2019 active duty military tax return:
- W2/1099 obtained from the Defense Finance and Accounting Service
- Your Military ID
- You and your spouse's Social Security Numbers
- Information about your deductions and credits
- Bank accounts and routing information
- Last Year’s tax return
- Any documents for investments or rentals
Filing Your Military Tax Return
More good news for you! Over the years there have become adequate resources to help you figure out how to file your active duty military taxes. A few quick resources include MilTax, TurboTax, and the IRS website. Military One Source has teamed up with MilTax, an online tax preparation and filing platform, while TurboTax now offers a military discount on their tax filing software, and the IRS has dedicated a whole section of their website to filing taxes the old way - by hand.
Regardless of how you file your active duty military tax return, make sure to note the deadline to file for 2020 (without any extensions) is March 15.