How Can Being A Member Of The Armed Forces On Active Duty Affect Tax Filing?

How can being a member of the armed forces on active duty affect tax filing? As a member of the Armed Forces, there are some things you may want to be aware of when tax season rolls around. If you are one...

If you are one of the men or women who are proudly serving our country, you'll be glad to know that Uncle Sam is grateful. As a member of the Armed Forces, there are some things you may want to be aware of when tax season rolls around. Here are some things to keep in mind when filing your returns.


"There are definite breaks given to the Armed Forces," explains Brian K. Gilroy, Attorney, CPA and. One of these breaks is that some of your income may be non-taxable. "Excludable income," Mr. Gilroy continues, "or the 'non-taxable,' is combat zone pay, living allowances, (that means your basic allowance for housing, your basic allowance for subsistence, or any overseas housing allowances, family allowances, death allowances, moving allowances, travel allowances), are all non-taxable income."




However, not all of your income will be non-taxable. "Taxable income is 'includable,' unless for service in a combat zone, so your basic pay, your special pay, your bonuses and other payments for high deployment per diem, incentive pay, are taxable," Mr. Gilroy says.


An additional courtesy extended to those on active duty are extensions on filing their tax returns. However, Mr. Gilroy warns, however, that the ability to file late does not automatically mean you can pay late. "You don't have to be in the military to get a 2 month or 4 month extension, but just because you get an extension for the time to file, the amount of taxes that you owe are still due when the original return was necessarily due, being April 17 this [2005 tax] year, typically April 15th. When you file for an extension, you're supposed to estimate the tax you owe and pay because you'll have interest on any amounts over which you paid starting to accrue."

The death of a family member on active duty in the Armed Forces, you may be entitled claim $12,000 in death benefits. As per the Military Family Tax Relief Act, the entire amount is (as of this writing) tax exempt.

Remember that members of the Army, Navy, Marines, Air Force and National Guard, as well as their families, are offered free tax assistance. Through the Volunteer Income Tax Assistance (VITA) Program, an IRS outreach program, the Armed Forces Tax Council (AFTC) provides military members and their families free advice and tax preparation assistance. VITA/FTC will need the following items when you seek assistance:

- photo I.D.
- social security cards for you, your spouse and dependents
- birth dates for primary, secondary and dependents on the tax return
-current year's tax package if you received one
-wage and earning statement(s) Form W-2, W-2g, 1099-R, from all employers
-interest and dividend statements from banks (Form 1099)
-a copy of last year's Federal and State returns if available
- bank routing numbers and account numbers for direct deposit
-other relevant information about income and expenses
-total paid for day care
-day care providers identifying number

Remember that if you are married filing jointly and would like VITA/FTC to file electronically for you, your spouse must be present in order to sign the tax return.

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