By Jillian Johnson
Tax time is here! Whether you’re new to military life or a seasoned veteran, new tax laws come out every year that can be difficult to navigate for military families. Quite a few things have impacted this 2020 tax season –but don’t worry, we are here to help you find the best resources and benefits available!
Here are some of the top benefits you and your family need to know about this tax season:
New Filing Deadlines
As a result of the impact of COVID-19, income tax filing deadlines have been pushed from April 15th to July 15th, 2020. Servicemembers currently serving in a combat zone receive an automatic 180-day extension to file returns, but can also request to have their filing deadlines pushed to October 15th, 2020. Visit your local certified tax expert to learn more.
The Military Spouse Tax Relief Act (MSRRA)
This law grants the same protection in regard to residency, voting, and taxes as the Civil Relief Act for servicemembers. Any income a military spouse earns in the state in which their spouse is stationed cannot be taxed by that state unless the spouse claims residency in that state. Military spouses may also claim the same state of residency as their servicemember – without even having lived there! To find out more and if you’re eligible for MSRRA, click here.
PCS Move Deductions
If you and your spouse recently PCS’ed, you can deduct some out-of-pocket moving costs, such as gas, moving company fees, and temporary storage units, on your 2019 tax return.
Uniform purchases and upkeep, such as dry-cleaning, can be deducted from your 2019 tax return as a work expense. However – the uniform allowance must be subtracted from the amount you deduct on your tax return.
Earned Income Tax Credit (EITC)
Combat pay can now be used to calculate income for the EITC. You can choose whether or not to include combat pay your spouse may have received in 2019, but combat pay still is nontaxable.
Small Business Tax Cuts and Jobs Act
If you own a small business in an approved area, you may qualify for a deduction of up to 20% of qualified business income, plus real estate trust dividends and other income. The threshold is up to $150,000 of income for a sole proprietor, and $315,000 for a dual-partnership. To see whether your small business qualifies, check out the IRS’ website.
Free Tax Resources
Companies such as H&R Block and TurboTax offer free tax prep and eFiling. MilitaryOneSource also offers free advice from a tax consultant, as well as access to free eFiling software with an account. Most military bases also offer free tax prep and eFiling at a specified location within their installations, manned by volunteers who undergo training to help you navigate the filing process.
To learn about more benefits offered to you and your family, be sure to check out the IRS’ section on the military here.