Members of the military have their own set of issues when it comes to filing taxes. Often soldiers move from place to place and are required to file a number of different returns. And military members generally face differing requirements when it comes to reporting of income.
Military members may receive combat pay, and they also may receive regular income. Members do not need to report the combat pay as income. Whether receiving combat pay or regular income, it is important to know how much money the military withholds from income when it comes to filing tax returns.
Figuring out residency
Since military members frequently are reassigned to different posts, it’s important to take into account state taxes for the new state which you reside. Do not assume that requirements will be the same as the prior state you resided in. For example, there are a handful of states that have no state income tax. Michigan, on the other hand, does have a state tax.
Deciding upon the right place of residence also has other financial complications specific to military members. Besides understanding the tax rates of various states, military members often may need to consider where they wish to retire or whether they wish for their children to attend a particular state college. Residency in a particular state may impact retirement income and tuition reimbursement.
Other tax and financial considerations
There are several other considerations military members need to make as well when it comes to filing taxes. When one or more spouse is a member of the military, there may be additional complications.
Deadlines for filing taxes may be different for those in combat zones. Under such circumstances, the soldier may wish to qualify for certain extensions.
Finally, it’s important for military members to take advantage of every expense for which they are eligible. This is especially important when it comes to moving expenses.
Obviously, such differences when it comes to reporting mean that extensive tax planning is in order. Even members of the military should be wary of the power of the IRS when it comes to matters involving unfiled or uncollected tax revenue.
Military families have enough to worry about without having to face tax penalties and fines due to inaccurate tax returns. Attorney representation for such members can thus be extremely helpful.