Tax Considerations for Active Military Personel

You are an active member of the military.  You and your spouse both work for the armed forces.  You have a family and you are stationed stateside on the same base as your spouse.  Being a typical military person, there are some considerations that you are probably not aware of or did not think of that you can deduct because of the expectations of your superior officers as well as the general public.

Itemized Deductions

The following will be a list of deductions that military personnel do not think about but are actually write offs due to the fact that they are not reimbursed for these job related expenses.  One of these is your appearance and how you must get a haircut more often than most people.  You have to keep yourself looking like a military person.  Another big ticket item is your uniform.  You are required to purchase your uniforms, boots, socks and all other parts of your uniform but are not reimbursed.  Another item is all of the patches that need to be sown on.  Many of our military people I find get the patches professionally sewn on.  The cost of paying a tailor or other professional to sew this on to your uniform can be claimed.  Another cost is dry cleaning.  You can write off the amount of the dry cleaning bill for the uniform.  This is because it is a job expectation and reasonable for your profession.

Special EITC Rules

You do not have to report your nontaxable pay you receive as a member of the Armed Forces as earned income for EITC. Examples of nontaxable military pay are combat pay, the Basic Allowance for Housing (BAH), and the Basic Allowance for Subsistence (BAS). The amount of your nontaxable combat pay is on your Form W-2, in box 12, with code Q.  But, you and your spouse can each choose to have your nontaxable combat pay included in your earned income for EITC. Including it as earned income may decrease the amount of tax you owe and may mean a larger refund. Calculate your taxes with the combat pay as earned income and without to find out what's best for you.  If you make the election, you must include in earned income all nontaxable combat pay you received. You can't choose to include only a part of the nontaxable combat pay in earned income.

Special Tax Considerations for Veterans

Disabled veterans may be eligible to claim a federal tax refund based on either an increase in the veteran's percentage of disability or the combat-disabled veteran applying for, and being granted, Combat-Related Special Compensation, after an award for Concurrent Retirement and Disability.

To do so, the disabled veteran will need to file the amended return, Form 1040X, Amended U.S. Individual Income Tax Return, to correct a previously filed Form 1040, 1040A or 1040EZ. An amended return cannot be e-filed. It must be filed as a paper return. Disabled veterans should include all documents from the Department of Veterans Affairs and any information received from Defense Finance and Accounting Services explaining proper tax treatment for the current year.

It is only in the year of the Department of Veterans Affairs reassessment of disability percentage (including any impacted retroactive year) or the year that the CRSC is initially granted or adjusted that the veteran may need to file amended returns.

 As you can see, there are many things to consider when you are serving in the military.  There are a lot of deductions that you might not think about.  I also included some special EITC rules and Special Tax Considerations for Veterans.  The important thing, especially for the deductions is to keep good records of what you are spending so that you can make sure to write off the total amount.