This past weekend, I did one of my favorite things when it comes to my work: I got to present my Heroes at Home message and “Living Rich for Less” as a breakout session to military families at the USAFR “Yellow Ribbon” Program. I always like to keep up on what is hot and what is not for military families and right now, it’s Tax Time when people are getting those W-2s in the mail and getting ready to file. I have some great tips that involve a number of “Do’s” and “Don’ts” for you as you approach this important time of the year.
Five Things You Should Do:
- Do take advantage of eligible deductions:
- Some education expenses for dependents
- Moving expenses for permanent change of station
- Members of the reserves can deduct unreimbursed travel expenses if you travel more than 100 miles from home for service. Travel expenses may include mileage, meals and lodging. Deductible amounts are the same as civilian employee expenses. Be sure to keep detailed records and receipts.
- Do Take All Your Tax Credits For Which You Qualify:
- Earned Income Credit for lower-income working individuals and families. Your credit amount depends on your filing status and number of dependents.
- Child Tax Credit, worth as much as $1,000 per child.
- Do File Your Tax Return on Time: But do you know when your due date is? The filing deadline is April 15 for most Americans but if you or your spouse is serving outside the U.S. or in Puerto Rico on April 15, your tax return isn’t due until June 15, 2015. If you or your spouse are in a combat zone, your tax return is generally due 180 days after your last day in the combat zone or your last day in a hospital for injuries sustained in combat. If you’re stationed outside the U.S., you still need to file a return.
- Do Use Direct Deposit: If you’re getting a refund from the IRS, choose direct deposit and e-file your return for the fastest possible refund. Select that option when you file your federal refund for free at TaxAct.com. You’ll also be able to track the status of your return and refund.
- Do Check It Twice: Double-check all the numbers you enter to make sure you are not making mistakes. Then have your spouse double-check it as well. Two sets of eyes are better than one.
Five Things You Don’t Want to Do:
- Don’t pay taxes on certain income and benefits, including:
- Basic allowances for housing (BAH) and subsistence (BAS)
- Dependent-care assistance programs
- Combat pay
- Don’t Pay More: You can file your federal taxes for free at http://www.taxact.com/. It will guide you through military tax benefits and your entire tax return. All you have to do is answer easy questions. If you need to file a state return, TaxACT offers a military discount and you will get it for only $5. You’ll automatically receive the discount after entering your Form W-2 information.
- Don’t Waste Your Refund: Put any refund you get toward consumer debt or toward building up your regular savings account. You should have 3 to 6 months of living expenses in this account because life in the military is uncertain and every family needs a safety net.
- Don’t Put It Off: Procrastination can lead to common human errors due to transposed numbers and this could cost you hundreds of dollars in penalties or missed deductions. So file early and when you are relaxed and don’t put it off until the last minute. The Operation Homefront Villages I visited (see below) were filled with military families who were homeless because they had no financial resources to draw from.
- Don’t Be Stingy: If you are lucky enough to get a refund, then you might want to consider giving a donation to a non-profit that you believe in such as Fisher House where they provide rooms for families near hospitals where our military members are recovering from serious injuries. Or, consider Operation Homefront which provides, among other services, a place for wounded warriors to live with their families until they can get back on their feet again.