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Tax Savings for Soldiers
If drill or training requires you to go more than 100 miles from home, you can deduct travel expenses, including lodging, mileage, parking fees, tolls and half the cost of meals. You can also write off unreimbursed rental car fees, or, if you use your own vehicle, deduct the standard federal mileage rate (57.5 cents per mile for 2015) or actual expenses.
If you live within 100 miles of drill, your travel expenses must be at least 2 percent of your adjusted gross income to claim a deduction.
If you go to the armory for a Guard-related reason on a day that you’re normally at your civilian job, you can deduct mileage for traveling from one workplace to the other, no matter the distance from home.
If you are prohibited from wearing certain uniforms when off duty, you can generally deduct any unreimbursed expenses for the purchase and upkeep of those uniforms. Examples include:
- Military dress and utility uniforms
- Articles not replacing regular clothing, such as rank insignia, epaulets and swords
Education Expenses & Professional Dues
The IRS allows you to deduct education expenses that meet one of the following criteria:
- Your employer or the law require continuing education to maintain your salary, status or job
- You need continuing education to maintain or improve your job skills
Note that the deduction doesn’t count if you’re only meeting minimum job requirements or finding a new trade; however, travel and other expenses to obtain this education can often be written off.
You can deduct dues paid to any professional society directly related to your military position, such as an engineering society. But don’t make the mistake of deducting dues for an officers’ or NCO club.
Combat Zone Exclusions
For enlisted Soldiers or warrant officers who have served in a designated combat zone for any part of a month, all income earned during that month is exempt from federal taxes. Officers, be aware that your monthly exclusion is capped at the highest rate of enlisted pay, plus any hostile fire or imminent danger pay received.
See the IRS’s list of tax-qualified combat zones at IRS.gov/uac/combat-zones.
Retirement Plan Withdrawals
Sometimes it’s unavoidable: You face financial hardship and need an early withdrawal from your IRA, 401(k) or other retirement plan. Normally, you’d face a 10 percent tax for taking it out before age 59½. But the IRS waives that penalty for eligible Reservists called to Active Duty. Consult a tax expert to see if you qualify. (Be advised: You must still pay income tax on the distribution.)
Check out these military-specific tax preparation resources:
Volunteer Income Tax Assistance (VITA) Program
Provides free tax advice and preparation, files tax returns, and offers other tax assistance to service members and their families. Visit the Legal Assistance Office at a military installation for more information. To find the closest installation, use the Armed Forces Legal Assistance Legal Services Locator at LegalAssistance.Law.AF.mil/content/locator.php.
Military OneSource Tax Filing Services
Offers no-cost electronic tax filing, as well as access to free financial counseling, tax consultation and more. Visit MilitaryOneSource.mil/financial-and-legal/taxes or call 800-342-9647.