FEBRUARY 14, 2023 – Whether you’re still on active duty, in the reserves, or have separated from a stint in the armed services, it’s important to keep current with all the financial and tax-related information that directly affects your life. The good news is that there are several excellent, no-cost resources from the US government that can help in this regard. However, it’s easy to become overwhelmed with all the suggestions and tips related to taxation, money management, and similar topics for former and current service personnel. What are the most relevant points?
Because nearly every form of income impacts personal taxes, it’s wise to focus on six subjects. First, know how to find no-cost tax assistance from trained volunteers. However, those in reserve units and on active duty can use the AFTG (Armed Forces Tax Guide), which is published by the IRS and linked on their website. Additionally, there are programs like MilTax that prepare returns at no cost for select vets and active-duty personnel. Whether you’re seeking information about deadline extensions, credits, how to deal with education benefits, or withholding-related issues, there are free resources available online. Here are more details about the most valuable ones.
Leveraging the Power of the Earned Income Tax Credit
If you are or were stationed outside the US during a deployment, or if for any reason you received non-taxable military pay, you get a break from the IRS when it comes time to file. While the rule is rather complex, the general gist of it is that you can choose to include that non-taxable pay when figuring EITC or not include it. The IRS suggests that people calculate their returns using both methods and choose the one that gives them the largest refund or results in the lesser amount of taxes owed. For overseas deployments, filers must calculate the EITC as if they were residing in the US.
Minimizing Monthly Expenses
For anyone on a budget, particularly veterans who are raising families on a restricted income, it’s essential to keep monthly expenses as low as possible. What are the most relevant expense categories for these citizens? In addition to car insurance premiums and homeowners’ insurance, many veterans, reserve, and recently separated members make regular payments on student loans, which can account for a substantial percentage of their total income. Luckily, platforms like Navient Marketplace bring all the best providers together in one simple format so consumers can compare rates, terms, fees, and other costs associated with recurring monthly expenses. It’s worth exploring such platforms and websites if you are interested in refinancing a college loan, getting the lowest car insurance rates, or uncovering savings in several other areas.
Automatic Extensions & Education Benefits
Federal authorities offer several breaks to anyone who is in a combat zone or stationed abroad. While all citizens are subject to the same laws regarding taxation rates based on income and other circumstances, those in combat zones or abroad can get several automatic extensions of time to file their returns and to pay any amounts owed. Veterans or active-duty personnel who receive any amount of VA educational benefits can omit those payments from their taxable income. The best part of this benefit is that filers don’t have to fill out any special forms or claims to get the break. All they need to do is report their regular income and leave out any VA education payments.
Free Help from Volunteers
Several government programs and a few non-profit organizations give free tax advice and assistance to veterans and active-duty personnel. In most cases, the individuals who volunteer to take on these tasks are highly qualified financial professionals who specialize in armed services taxation issues.