Last-Minute Tax Tips
All military personnel have to file taxes, but there are several rules and provisions that military personnel should consider at tax time. Here are five last-minute tax tips to consider.
- File by the appropriate deadline. Although you may have a different deadline depending on your service status, you do need to make sure to file by the appropriate deadline. File an extension if you have to, but don't miss any deadlines or you'll make your situation worse.
- Don't pay your tax bill on credit. Although it's possible to pay your taxes with a credit card, the IRS charges additional processing fees for doing so. These fees are nearly always greater than the value of any rewards you would get from using your credit card.
- Finance your tax bill with low-cost government loans. If you can't meet your tax bill, you can set your own repayment terms for up to 36 months and approval is generally automatic. You'll be charged a modest setup fee (which is reduced if you agree to automatic withdrawals from your bank account) and will be charged a low interest rate between 3-5%. This is much cheaper than the penalty rate of up to 12% per year that you may be charged if you don't pay.
To set up an installment plan, simply file a Form 9465 along with your tax form to request an Installment Agreement.
- Use all available deductions. This goes without saying, but make sure you use all available regular deductions. A tax preparation software package like TurboTax can help you identify all that would be appropriate.
- Take advantage of special Military deductions. Military personnel have additional tax deductions. Here are a few of the most common:
- PCS relocation expenses: unreimbursed expenses can be deducted
- Combat pay: For enlisted men and warrant officers, all military pay for any partial month of combat service is not taxable
- Travel to reserve duty: If you have to travel more than 100 miles for reserve duty, these travel expenses can be deductible
- Transitioning back to civil life: job search and relocation expenses may be reimbursable
Tax season is a stressful time, but postponing filing will just add to your stress. These tips can help minimize the stress of tax season and maximize your returns.