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Tax Considerations and Forms for Military Members

Instructor: Patricia Jankowski

Patricia has a BSChE. She's an experienced registered nurse who has worked in various acute care areas as well as in legal nurse consulting.

Members of the U.S. Military and their families make unique sacrifices to ensure the safety and security of our country. The U.S. government rewards them with special considerations when it comes to paying taxes, which this lesson will discuss. Updated: 08/07/2022

They Sacrificed For Our Freedom

Members of the various branches of the U.S. Military and their families make significant sacrifices with their work. Often, their employment involves frequent moves, uprooting children from friends, schools, and regular activities. This creates the bureaucratic hassle of transferring school and medical records and can cause children to feel anxious or isolated. Military personnel are exposed to dangers that most of us never have to face to ensure that we can enjoy our way of life. Because of these sacrifices, the U.S. government gives military members special consideration when paying taxes.

Free Tax Services for Military Members

Filing annual income taxes with an accountant can be costly and time-consuming; however, members of the U.S. military can file their taxes for free. Some available options include:

  • Military One Source - This program offers free online software to electronically file one federal and up to three state tax returns. There are no income restrictions on this service, which is called MilTax.
  • IRS Free File - Any member of the military with an annual income of less than $69,000 (in 2019) can file their taxes for free. There are several software providers to choose from, some of which can file free electronic returns for both state and federal taxes. This can be done conveniently online.
  • Volunteer Income Tax Assistance - This service, also known as VITA, is a face-to-face service in which trained volunteers will prepare income tax returns for military personnel for free, with quick and efficient electronic filing.

Special Tax Benefits

In addition to free filing of returns, members of the military qualify for several tax breaks. Since they are often involved in dangerous missions or may move frequently, these special tax benefits are designed to accommodate their unique lifestyle. Some of these include:

  • Deadline extensions - Many types of military personnel, especially those who serve in combat zones, can get an extension for their tax due date, giving them more time to file or to pay.
  • Deduction of moving and travel expenses - While many military moving expenses are reimbursed, those that are not can often qualify for a tax deduction. Some personnel in the National Guard or Reserves may also deduct certain travel expenses.
  • Exclusion of combat pay - Those who serve in a combat zone or similar military operation support zone can receive tax-free pay for this service.
  • Earned Income Tax Credit - Military personnel whose income is below a specified level may be able to get an Earned Income Tax Credit (EITC). This may mean getting a tax refund at the end of the year.

Who Is Eligible for Military Tax Benefits?

Those who belong to various branches of the U.S. military, some uniformed services, or military support organizations are eligible for different military tax benefits. This includes the Army, the Navy, the Air Force, the Marine Corps, the Space Force, and the reserves. Uniformed services and support organizations include:

  • United States Public Health Service Commissioned Corps - This organization includes doctors, nurses, engineers, veterinarians, and other professionals who deal with front-line public health issues like the COVID 19 pandemic.
  • National Oceanic and Atmospheric Administration Commissioned Officer Corps - This organization includes many professionals who conduct scientific and environmental research and monitor the weather and environmental spacecraft equipment that helps to predict dangerous weather patterns. They also conduct geophysical surveys and aeronautical charting.

The benefits available for specific members of the military are outlined in Publication 3, Armed Forces Tax Guide of the IRS.

Special Military Tax Forms

Members of the U.S. Military deal with the same tax forms that other U.S. citizens use when they file their annual income taxes, like the 1040, the 1099, and the W2. However, additional forms can be used for specialized military deductions. These forms are generally added to the 1040 and filed along with standard annual tax forms. Some of these include:

  • Form 2016 - This form is used for overnight travel expenses for members of the Reserves and the National Guard.
  • Form 3903 - This form is used for moving expense deductions.
  • Form 1099 R - Retired military personnel can sometimes qualify for both Social Security and military pension benefits. Form 1099 R is used to record pension benefits for tax purposes.

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