With the tax filing deadline quickly approaching, countless Americans will soon be scrambling to deal with their returns -- and that includes those in the military. But if you're a military member, you should know that you might be privy to certain benefits that civilians don't get access to. With that in mind, here are a few tips that might come in handy as you prepare to tackle your upcoming tax return or do some tax-planning for the future.
1. Combat pay isn't taxable
If you were assigned to a combat zone or hazardous duty area in the course of your service, here's some good news: You don't have to report those earnings on your tax return. That said, you're still required to pay Social Security and Medicare tax on that income, and depending on your home state, local taxes might apply as well.
2. Your uniform expenses may be deductible
While you're probably used to dressing in uniform for work, the cost of purchasing and maintaining that attire can grow burdensome. But depending on your total spending and earnings, you may be eligible to deduct uniform expenses on your taxes this year (meaning your 2017 return). This will apply if your out-of-pocket costs exceed 2% of your adjusted gross income.
3. You may get more time to file your return
If you're in the military, you may not have to worry about the April 17 filing deadline this year. If you're stationed outside the country for the entire 24-hour period of the tax filing deadline, you're given an automatic two-month extension to file your return. However, keep in mind that while you get more time to file your taxes, you don't get more time to pay your taxes. If you owe the IRS money and don't pay by the general deadline, you'll face penalties for being late.
If you're stationed in a combat zone, you get even more time to submit your tax return. The IRS grants an additional 180 days from either the date you return from a combat zone, or your last date of hospitalization for injuries sustained while serving in a combat zone, to file your taxes. During this extension period, you won't be charged penalties for tax payments that otherwise would've been due by the standard deadline. Keep in mind that if you're married and filing a joint return, any extension you receive applies to your spouse as well.
4. You can get free tax help
Filing a tax return can be tricky, and if your situation is complicated, you may need to rely on an outside professional to get your return completed. The good news, however, is that most military bases offer free tax preparation services during the tax season, and a number of major tax preparation companies offer military personnel significant discounts as well. Since Americans pay an average of $261 for professional tax help, getting that service for free could save you a pretty penny.
5. A Thrift Savings Plan will lower your taxes
Similar to 401(k) plans, Thrift Savings Plans allow you to set aside pre-tax dollars for retirement. Not only can your money grow tax-deferred, but you also won't face the same potentially hefty investment fees 401(k) participants are often subject to. If you contribute to a plan this year, it won't help with your 2017 tax return, but you'll reap the benefits when you file your 2018 taxes. The current annual contribution limits are $18,500 for adults under 50, and $24,500 for those 50 and older.
You deserve as many tax breaks as you can get for serving your country. Follow these tips, and with any luck, you'll save money on your taxes while enjoying a hassle-free filing process.