Some states allow active duty personnel to file in the place where they reside or where their residence of file is. You may want to check with your tax professional to see which will benefit you more.
Ex. California tax law: Service members domiciled outside of California, and their spouses, exclude the service member’s military compensation from gross income when computing the tax rate on nonmilitary income Requirements for military service members domiciled in California remain unchanged Military service members domiciled in California must include their military pay in total income In addition, they must include their military pay in California source income when stationed in California However, military pay is not California source income when a service member is permanently stationed outside of California (https://www.ftb.ca.gov/forms/2014/14_1032.pdf)
- Each base or military facility should have a place for the military to do their taxes usually at an extremely discounted rate or even at times, free.
- Military Family Readiness Military Tax Breaks Checklist- There are several different ways military can file taxes for FREE and there are new tax breaks and deductions that could save you thousands, and put money back into your pocket! See bullet points below
- When To File
- W-2 release schedule: The Department of Defense releases a list annually when Active Duty and Reservists W-2's will be available on the MyPay website. For National Guard, you must check with your state NG website to get more detailed information on release dates. Please note, the dates are staggered for different service branches, one date does NOT fit all! Here is the link to DOD W-2 release schedule: http://www.dfas.mil/pressroom/dfasnewsreleasearchive/Release1312001.html
- There are times,
however, when you need
to contact someone to
request or correct a tax
statement. Here's some
phone numbers or
locations to help you
get what you need:
• Army, Navy, Air Force (reserve, active & National Guard) W2: 888-332-7411.
• Marine Corps (active & reserve) W2: Contact your finance office.
• Marine Corps (separated members) W2: 888-332-7411 (Select Option #2)
• Thrift Savings Plan 1099R: 887-968-3778
• DoD Savings Deposit Program 1099INT: 888-332-7411
• Voluntary Separation Incentive/Special Separation Benefit W2: 800-321-1080.
Be aware that call volume increases substantially during the tax season, so keep that myPay login information secure and available; it'll save you time and frustration. (copied from http://www.dfas.mil/militarymembers/taxinfo/taxstatements.html
Information from the IRS
Where To File
Military OneSource tax preparation and filing software walks you through a series of questions to help you complete your tax return. This self-paced tax software allows you to:
- Complete and electronically file your federal and up to three state tax forms
- Check your electronic filing status
- Rest easy knowing the tax software vendor is by your side if you get audited
Get 100 percent accurate
calculations or the tax
software vendor will
reimburse you up to
$10,000. Terms and
File Your Taxes For FREE
Use the military's 'Volunteer Income Tax Assistance Program' located at almost all military installations world wide. When you use the local military installations VITA's volunteers know they are trained and certified by the Internal Revenue Service and you are getting the same quality if not better from a civilian tax preparer or business, because the VITA's are specifically trained in all military tax related issues. You can look up each installations Tax Assistance Office by directory or calling the post operator. You must be active duty or a dependent with ID to make an appointment.If you insist on doing your own taxes, or you are a simple straight forward return here are some software and website deals you need to know:
FREE For All Active Duty Military (no rank restrictions). You can prepare both Federal and State returns for Free with their Military Edition!
Free Federal & State Return for E1-E5 (E-6 and above are charged).
- Combat and Hazard Duty Pay
- Deployment Tax Advantages
The IRS will let you put tax-free combat pay in the Thrift Savings Plan or an Individual Retirement Account. If you contribute to a Roth IRA or Roth TSP it is tax-free in and tax-free at retirement.If you or your spouse are deployed you may qualify for a deadline extension for several tax-related actions, including:
- Filing returns
- Paying taxes
- Making claims for refunds
- Contributing to IRAs
- Military Family Readiness Spouse Taxes
There are new rules for military spouses. Military Spouses Residency Relief Act of 2009 states that military spouses can now pay taxes in their state of residence, not where they are stationed. No more paying state income taxes in a state that they are stationed. Remote filing. Joint returns must be signed by both spouses, but if deployed, a spouse can file with a Power of Attorney (some states and installations require a Special Power of Attorney for this).
- Military Home Buying & Selling
Bought a house only to have to turn around and sell it within 5 years of purchase Military who sell a home can avoid paying capital gains taxes on the sale of a home if they owned and used it as their principal residence for two of the five years before the sale. This rule can be used to exclude up to $250,000 in gains for individuals or $500,000 for married couples; learn more at the IRS website or consult a professional tax advisor.
- PCS & Moving Deductions
If your move is a required permanent change of station (PCS), the IRS lets you deduct the "reasonable unreimbursed expenses" of relocating yourself and your family: If your new job requires relocation, your moving expenses may be deductible. You can deduct the expenses of moving your household goods and personal effects, including expenses for hauling a trailer, packing, crating, in-transit storage, and insurance. You cannot deduct expenses for moving furniture or other goods you bought on the way from your old home to your new home. Storing and insuring household goods and personal effects. You can include only the cost of storing and insuring your household goods and personal effects within any period of 30 consecutive days after the day these goods and effects are moved from your former home and before they are delivered to your new home. Travel On PCS Orders: You can deduct the expenses of traveling (including lodging but not meals) from your old home to your new home, including car expenses and air fare. You can deduct as car expenses either:
Your actual out-of-pocket expenses such as gas and oil, OR
The standard mileage rate of 24 cents a mile.
You can add parking fees and tolls to the amount claimed under either method. You cannot deduct any expenses for meals. You cannot deduct the cost of unnecessary side trips or lavish and extravagant lodging.
- Overseas Moves
The IRS states a foreign move qualifies to the country, NOT from the foreign country back to the USA. So if you have moved overseas on PCS orders this past year a military family may include the reasonable expenses of: Moving your household goods and personal effects to and from storage, AND Storing these items for part or all of the time the new job location remains your main job location.
ETS Deductions. If you are exiting out of the military and back into civilian life, some qualified expenses that can be deducted include: Travel, Resume preparation fees & Outplacement agency fees
- National Guard & Reserves
National Guard and Reserves Travel deductions: If required to travel more than 100 miles away from home to perform Reserve duties, you can generally deduct any unreimbursed travel expenses. National Guard & Reserves Waived Penalties: A call to active duty sometimes creates a financial hardship for reservists. If the reservist addresses the hardship by withdrawing funds from their retirement savings, the IRS may provide accommodation.
- Retirement Accounts & TSP
Thrift Savings Plan combat-zone service can boost traditional TSP contribution limits to $51,000 in 2013 and $52,000 in 2014. Dollars that go into your traditional TSP tax-free won't be taxed when you withdraw the money — though you will owe tax on the earnings. You may be able to dip into your IRA, 401(k) or TSP without the 10% penalty tax normally applied for withdrawals before age 59½, however you will still have to pay a steep income tax on the withdraw disbursement in most cases. Check the IRS website for more information on financial hardships. For More Information: Thank You Troops can go online to the IRS Publication 3, Armed Forces' Tax Guide, which summarizes many important military-related tax topics. Publication 3 may also be ordered by calling 1-800-TAX-FORM (800-829-3676).
- Updated 05/15/2015 lgs