2021 Military Tax Tips 

Do you know that you can take advantage of subtle differences in tax law pertaining only to military members? The IRS’s Armed Forces Tax Guide details many special tax situations for those serving in the Air Force, Marine Corps, Coast Guard, Army, or Navy. Below we review some areas that you may not be aware of.

Moving Expenses | If you are married, the government pays for the majority of your moving expenses. The remainder can be deducted or reimbursed depending on the situation. Active duty service members who choose to move themselves and their families when PCSing can deduct ‘reasonable unreimbursed expenses’. Use IRS Form 3903.

Uniform Expenses | All branches of the U.S. Military issue uniforms, and provide a clothing allowance for regular upkeep. As of tax year 2018, expenses above and beyond your allowance are no longer deductible.

Reservists | Active reservists who travel more than 100 miles from home for reserve duty may deduct unreimbursed travel expenses including transportation, standard mileage rates, lodging, and meals. Use IRS Form 2106. 

Life Transition Expenses | Although the military offers a civilian life transition program to assist you in preparing for life after your service, some of your costs for job hunting incurred during these programs may be deducted. Allowed expenses include resume preparation, travel to interviews or career fairs, postage and mailing fees, and employment agency fees. 

Deadline Extensions | Military members who serve in a combat zone are allowed extra time to file their taxes. The IRS offers an automatic extension for qualifying members for filing returns, paying tax obligation, and filing refund claims. Even though the extension is automatic, you may be required to submit documents and forms to the IRS in order to file for extension. 

Combat Zone Exclusions | If you serve in a combat zone, you can exclude ‘combat pay’ from your income. Excluded pay includes active duty pay earned when serving in a combat zone, imminent danger/hostile fire pay, voluntary re-enlistment bonuses occuring during time serving in a combat zone, pay for accrued leave earned while serving in a combat zone, and pay earned while hospitalized as a result of service in a combat zone.  

We hope that you can use these tips this year. If you have any other tips that you wish to share with other service members, comment below!If you are looking at a PCS move in the future and have questions, feel free to contact one of our Military Relocation Specialists. We are here to help!