4 Must-Know Tax Benefits for Military Families
March 11, 2019

4 Must-Know Tax Benefits for Military Families

4 Must-Know Tax Benefits for Military Families

By: John Sledgianowski

SledgianowskiThere are some unique tax benefits for military families that can help you save money and even make the process of doing your taxes less stressful. Let’s take a closer look at some special provisions that can benefit your family as tax time rolls near. We’ll highlight some tax tips for you and your family that you may be unaware of:

1. Deductions for Combat Zone Members –In most cases, the Combat Zone Exclusion allows certain types of pay that is earned while in a combat zone to be excluded from one’s gross income. This includes hostile fire/imminent danger pay, bonuses for reenlistment, state bonuses for serving in a combat zone, your student loan repayments, accrued leave, and certain awards.

2. Help With the Tax Process – Did you know the process of tax filing for military families can be made a little bit easier thanks to the Volunteer Income Tax Assistance services? This program is designed to help military families worldwide with their tax returns. They can answer questions you may have, offer guidance about different subjects or exemptions, and can assist you with your tax return.

3. Not Having to Include Living Allowances – Another tax benefit for military families involves living allowances. If you weren’t already aware, allowances such as BAS (Basic Allowance for Subsistence), BAH (Basic Allowance for Housing), and OHA (Overseas Health Allowances) are three types of compensation that are paid pre-tax and excluded from your tax returns’ gross income amount.

4. Extra Time to File – Did you know that if you are in a combat zone or stationed abroad when tax deadlines occur, you may be allowed to extend your deadline? There are multiple common scenarios for military members when it comes to extending deadlines:

  • If your current post is outside of the U.S. or Puerto Rico, you automatically qualify for an extension until June 15, 2019 – use the IRS Form 4868. To take advantage of this, you need to attach a letter explaining your situation to your tax return. You can also request an additional four month extension if you cannot file by June 15.
  • For those in a contingency operation or combat zone, you automatically qualify for an extension. This new deadline would be 180 days from the time you leave the eligible area or the area is no longer considered to be a combat zone.
  • Filing for an extension does not extend the time to pay taxes. It may be beneficial to review your tax filing extension with your family’s tax accountant or financial expert to determine the payment amount due in April.

These are a few benefits for military families that can help save time throughout the year. You can also speak with a Relationship Manager at AAFMAA Wealth Management & Trust to discuss your specific financial situation.

If you’d like to speak with one of our Financial Advisors to receive a Free Portfolio Review, please fill out the contact form below.

Information provided by AAFMAA Wealth Management & Trust LLC is not intended to be tax or legal advice.  Nothing contained in this communication should be interpreted as such. We encourage you to seek guidance from your tax or legal advisor.  Past performance does not guarantee future results.