5 Military Tax Benefits

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Members of the United States Armed Forces qualify for some special tax benefits, including provisions related to moving for military service or serving in active duty.

Here are five benefits you should be aware of as a member of the military:

  1. Some military income and benefits are not included in taxable income.

    You do not have to pay income tax on combat pay. You also do not pay tax on many military benefits, including:

    • Group-term life insurance
    • Professional education
    • Uniform allowances
    • Death allowances
    • Certain education allowances for dependents
    • Allowances for family travel
    • Basic allowances for housing, subsistence, and overseas housing
    • Dependent care assistance
  2. You may have extra time to file your return if you are serving overseas.

    If you are a member of the troops serving overseas, you have an extra two months to file your federal income tax return. You can file your 2013 tax return any time up to June 16, 2014, without filing for an extension.

    If you are serving in a combat zone, you have even more time to file your return. You are allowed 180 days from the date you return from the combat zone, or 180 days from your last date of continuous hospitalization for injuries received while serving in a combat zone. These 180 days are in addition to the number of days you had left to file the return when you entered the combat zone.

    The IRS does not add interest or penalties to your taxes during this extension.

  3. Earned Income Credit provisions.

    Most taxpayers must live in the United States to qualify for the Earned Income Credit. However, if you are a member of the armed forces and are stationed outside the U.S. on extended active duty, you may still qualify for the Earned Income Credit.

  4. You can keep your home state for tax purposes when you are in the military.

    In the past, moving frequently for military service meant filing state income tax returns for each state in which you lived. Thanks to the Servicemembers Civil Relief Act (SCRA), you can keep your home state residence for tax purposes, regardless of where you live due to military orders. You cannot be taxed on military income by any state other than your home state. The home state you have on file with the military will withhold state income tax from your pay.

    If you are a spouse of a military member, you can also keep your home state for income tax purposes.

  5. Deduct military moving expenses.

    Most people who work as employees or as self-employed individuals must pass a time test and a distance test to deduct moving expenses. If you are in the military and you have expenses for which you are not reimbursed, you can deduct qualified expenses regardless of how long you work at the new location or the distance between your old house and your new job.

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Upcoming Tax Dates

January 1 — Everyone
Federal Holiday (New Year's Day) Details

January 10 — Employees who work for tips
If you received $20 or more in tips during December, report them to your employer Details

January 15 — Individuals
Make a payment of your estimated tax for 2018 if you did not pay your income tax for the year through withholding (or did not pay in enough tax that way). Use Form 1040-ES Details

January 15 — Social security, Medicare, and withheld income tax
If the monthly deposit rule applies, deposit the tax for payments in December 2018

January 15 — Farmers & fishermen
Pay your estimated tax for 2018 using Form 1040-ES Details

January 21 — Everyone
Federal Holiday (Martin Luther King, Jr. Day) Details

January 31 — All Employers
Give your employees their copies of Form W2 for 2018. If an employee agreed to receive Form W2 electronically, have it posted on a website and notify the employee of the posting.

January 31 — Individuals who must make estimated tax payments
If you did not pay your last installment of estimated tax by January 15, you may choose (but are not required) to file your income tax return (Form 1040) for 2017 by January 31. Filing your return and paying any tax due by January 31 prevents any penalty for late payment of the last installment. If you cannot file and pay your tax by January 31, file and pay your tax by April 15.

January 31 — Payers of gambling winnings
If you either paid reportable gambling winnings or withheld income tax from gambling winnings, give the winners their copies of Form W2G.

January 31 — Social Security, Medicare, and withheld income tax
File Form 941 for the fourth quarter of 2018. Deposit or pay any undeposited tax under the accuracy of deposit rules. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the quarter timely, properly, and in full, you have until 02-10 to file the return.

January 31 — Certain small employers
File Form 944 to report social security and Medicare taxes and withheld income tax for 2018. Deposit or pay any undeposited tax under the accuracy of deposit rules. If your tax liability is $2,500 or more for 2018 but less than $2,500 for the fourth quarter, deposit any undeposited tax or pay it in full with a timely filed return. If you deposited the tax for the year timely, properly, and in full, you have until February 10 to file the return.

January 31 — Farm employers
File Form 943 to report social security and Medicare taxes and withheld income tax for 2018. Deposit or pay any undeposited tax under the accuracy of deposit rules. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the year timely, properly, and in full, you have until February 10 to file the return.

January 31 — Federal unemployment tax
File Form 940 for 2018. If your undeposited tax is $500 or less, you can either pay it with your return or deposit it. If it is more than $500, you must deposit it. However, if you deposited the tax for the year timely, properly, and in full, you have until February 10 to file the return.

January 31 — All businesses
Give annual information statements to recipients of certain payments you made during 2018 Details

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