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Tax Filing for Military Members and their Families - What You Need To Know

February 19, 2016

Thinking about filing your taxes and hiring a Denver tax pro? We are here to help! Even if you are well organized and prepared, tax time is often stressful , so in order to file your taxes as quickly and efficiently as possible it is important to know what tax laws you can benefit from and what credits you may be eligible to receive. We will go over all sorts of important tax information over the next few months leading up to the filing deadline, but this week we want our military clients to know some important tax regulations that can affect them. With family members who are often abroad some or part of the year, tax filing for military personnel and their families can be even more confusing.
Members of the U.S. Armed Forces have a number of different tax laws that can affect their filing. For federal tax filing purposes, the IRS website defines U.S. Armed Forces members as those who “are enlisted in all regular and reserve units controlled by the Secretaries of Defense, the Army, Navy and Air Force. The Coast Guard is also included, but not the U.S. Merchant Marine or the American Red Cross.” Different departments and divisions may qualify for particular allowances or extensions. Here are a few of the most common tax laws that affect military members and their families.
1- Extended Tax Deadlines: For those military service members who are serving in a combat zone, the IRS provides an automatic 180-day extension for filing your taxes. The 180 day extension kicks in after you return home from the combat zone, so you will have up to six months after your return to gather necessary paperwork and file on time. Social Security and Medicare taxes are not eligible for this extension, so make sure to coordinate with a tax professional at home to take care of those items on time.
2 - Combat Pay Cannot Be Taxed: You will earn compensation for your time while serving in a combat zone, but that compensation does not count as taxable income. Yes, you read that right, you cannot be taxed on income earned while you were serving in a combat zone. Keep in mind that this does not exempt you from filing taxes during this time - if you file jointly with your spouse and if you or your spouse earned any other income outside of combat pay, this will of course be subject to normal tax regulations.
3- Active Duty Service Member Deductions: If you are an active duty service member and your job requires you to move, you are eligible to deduct certain expenses that you incur while moving you and your family. Not all expenses are tax deductible, so make sure to check with your local Denver tax accountant to see what you can or cannot deduct - and don't forget to keep your moving receipts!
4 - Free Online Tax Filing: There are many ways for members of the military to file their federal and state taxes online for free, and lots of well known companies offer free e-filing services. Make sure to read the fine print, and also have your photo ID or military ID handy.
The professional Denver accountants at Bloch Rothman and Associates are always up to date on the most recent tax laws and any changes to previous tax laws and we are here to support our military members and their families in filing your taxes. Don't forget, the tax filing deadline is April 15th, so contact us today to meet with one of our tax professionals.