Don't Mess With Taxes

This post was reviewed and updated on Memorial Day, May 28, 2018.

American Soldiers, American Wars montage by Beverly via Flickr CC.

Military casualties are the high price of freedom. Memorial Day commemorates those who paid this ultimate price.

Over the years more than 42 million American men and women have served their country in armed conflicts. Almost 1.2 million have died doing so.

The Memorial Day Foundation, using Department of Defense statistics, has tallied the terrible cost of war since our country's first Revolutionary War battle to the latest troops lost in Operation New Dawn in Iraq.

dThere are many ways to show respect for the men and women who died serving our country. Regardless of which you choose, also try to participate in the National Moment of Remembrance. It's at 3 p.m. your local time. All you have to do is stop to observe a moment of silence

Remembering, helping: Memorial Day was created to honor and remember fallen military personnel. That still should be its primary purpose.

However, the day does fall in May, which also is National Military Appreciation Month. As we pay our respects to service members who paid the ultimate price, this also is a time to acknowledge military personnel still serving, many of who are in harm's way

From a tax standpoint, there are some benefits available to U.S. troops and their families. They are covered in Internal Revenue Service Publication 3, Armed Forces Tax Guide.

Here are 10 tax breaks that could help members of the military.

1. Combat pay is partly or fully tax-free.
   
   
2. Military personnel have the option of treating combat pay that's excludable from taxable income as earned income for purposes of claiming the Earned Income Tax Credit (EITC). This could help low-and moderate-income service men and women who find that the pay exclusion leaves them with no earned income, thereby making them ineligible for the EITC. They can choose to include all or none of their combat pay, but not just part of it, in calculating their EITC benefits.
   
   
3. Reservists whose reserve-related duties take them more than 100 miles from home can deduct their unreimbursed travel expenses on Form 2106 or Form 2106-EZ. This is an above-the-line deduction found directly on Form 1040 (and that form only, not 1040A or 1040EZ), meaning you don't have to itemize deductions to claim it.
   
   
4. Full-time, active duty members of the military generally cannot deduct the cost of uniforms. However, if you are armed forces reservist, you can deduct the unreimbursed cost of your uniform, as well as expenses for its cleaning and upkeep. The main requirement here is that the uniforms are not suitable for wear when you are off duty. Note, too, that you must reduce your allowable expense by any uniform allowance you receive. And this tax break is a miscellaneous itemized tax deduction, the total of which shown on Schedule A must exceed 2 percent of your adjusted gross income.
   
   The miscellaneous itemized deduction cited above in the original and prior updates of this post was eliminated as part of the Tax Cuts and Jobs Act bill that took full effect in 2018. This tax break will not be available to military personnel through 2025 and possibly longer if the individual tax provisions are extended or made permanent by Congress.
   
   So the new #4 for the 2018 tax year and beyond is education benefits for current service personnel and veterans.  If you qualify, payments you receive for education, training or subsistence under any law administered by the Veterans Administration are tax free. As such, you don't include those payments as income on your federal tax return. 
   
   
5. Eligible unreimbursed moving expenses are deductible on Form 3903.
   
   
6. Some service members who contribute to an IRA or 401(k)-type retirement plan, such as the federal government’s Thrift Savings Plan, may be able to claim the saver's credit, also known as the retirement savings contributions credit, on Form 8880.
   
   
7. Service members stationed abroad have extra time, until June 15, to file a federal income tax return. Those serving in a combat zone have even longer, typically until 180 days after they leave the combat zone.
   
   
8. Service members may be able to delay payment of income tax due before or during their period of service. IRS Publication 3 has details on how to request this relief.
   
   
9. Free File is available to qualifying service members who prepare and e-file their own returns. The 2016 tax return requirement is that the taxpayer, military or otherwise, have adjusted gross income of $64,000. The online tax preparation and e-filing option is available through the October extension filing deadline.
   
   
10. The IRS partners with the military through the Volunteer Income Tax Assistance (VITA) program and Military OneSource to provide free tax preparation to service members and their families at bases in the United States and around the world. 

If you are a member of the U.S. armed forces, be sure you take advantages of all the tax benefits available to you. It's not nearly enough for all that you give, but at least it's a small way to say thanks for serving.

And for those men and women who made the ultimate sacrifice to protect us, you and your families have our heartfelt gratitude and acknowledgement on Memorial Day and every day.

You also might find these items of interest:

• Acknowledging the costs paid by our troops
• Don't overlook state tax breaks for military personnel
• Remembering fallen troops and helping their families on Memorial Day (and beyond)