TAS Tax Tip: Resources for Military Personnel and Their Families

Did you know that members of the U.S. Armed Forces can have special tax considerations for both federal and state tax purposes?

Military Tax Resources

Here are some resources to help military personnel, including veterans, understand federal tax issues unique to the military.

Who is Considered Eligible?

Active duty or reserve members of the U.S. Armed Forces, listed below, may be eligible for military tax benefits. Recently retired or separated members may also be eligible for benefits.

United States Army (including Army Reserve and Army National Guard)
United States Navy (including Navy Reserve)
United States Air Force (including Air Force Reserve and Air National Guard)
United States Marine Corps (including Marine Corps Reserve)
United States Coast Guard (including Coast Guard Reserve)
United States Space Force (including Space Force Reserve)

Note: The U.S. Armed Forces does not include the U.S. Merchant Marine or the American Red Cross. Your military status affects whether you are eligible for certain benefits. You can check eligibility for military tax benefits by visiting IRS.gov.

Service in a Combat Zone or Qualified Hazardous Duty Area

There are rules specific for those who serve in a combat zone or qualified hazardous duty area. These taxpayers and their families can find out more on the Tax Exclusion for Combat Service page, including the Questions & Answers on Combat Zone Tax Provisions page of IRS.gov. If you fall into this category, you should also review special EITC rules. If these apply to your tax situation, it could lead to a larger refund.

Active-duty military serving in a combat zone or a hazardous duty area often have more time to file their tax returns. However, those with spouses and families may wish to file as soon as they are able to claim various tax benefits and get any refund. If only one spouse is present to file a joint return, they must have proper authorization to file a joint tax return on behalf of their spouse.

Main resources for military tax-related information

The IRS has a variety of resources to help members of the military, veterans and their families navigate the unique and sometimes complex circumstances that come with filing federal tax returns and paying federal taxes.

Here’s a list of some of the tax-related resources you may find helpful:

Tax Information for Members of the Military
Military Family Tax Benefits
Eligibility for Military Tax Benefits
Information for Veterans
Special Tax Considerations for Veterans
About Publication 3, Armed Forces Tax Guide (Publication 3 covers the special tax situations of active members of the U.S. Armed Forces. It does not cover military pensions or veteran benefits or give the basic tax rules that apply to all taxpayers.)
Publication 4940, Tax Information for Active Duty Military and Reserve Personnel

Veterans and Disabled Veterans

Start with reviewing the Information for Veterans and the Resource for Disabled Veterans page on IRS.gov.

If you are a disabled veteran, your disability payment may qualify for certain tax exclusions. You may also need to file an amended return, and in certain situations, will have more time to file a claim for refund. See:

Federal tax return preparation and filing resources

Military OneSource, a program offered by the Department of Defense, provides a range of free resources for military members, veterans and their families. MilTax, Military OneSource’s tax service, provides online software to electronically file a federal and up to three state tax returns for free, regardless of income. Military OneSource is available online at MilitaryOneSource.mil or by calling 800-342-9647.

Taxpayers who do not qualify for MilTax have other options to prepare and e-file their federal tax returns for free. Those who earned $72,000 or less in 2020 could use IRS Free File software when filing in 2021. Check the income limit for 2021 when those figures are released near the end of the year.

- For 2020 active-duty military and their spouse, Free File had a special offer. Individuals and their families who met the income limitation could choose from any of nine companies without regard to additional eligibility requirements. To access the right option, make sure to begin at IRS.gov/freefile or use the internet search term “IRS Free File Program.” Check the IRS Free file pages to see if this special offer will continue in 2021 as we get closer to the filing season.

Free face-to-face tax return preparation services by volunteers is available through the Volunteer Income Tax Assistance program and Tax Counseling for the Elderly programs. Both have helped prepare many military-related tax returns and are often located on military installations closer to the filing season each year. Veterans may also qualify for free tax help at locations nationwide. You do need to meet income or age requirements to use either of these free services.

Other Tax-Related Assistance

The Taxpayer Advocate Service (TAS) is an independent organization within the IRS that helps taxpayers and protects taxpayers’ rights. We can offer you help if your tax problem is causing a financial difficulty, you’ve tried and been unable to resolve your issue with the IRS, or you believe an IRS system, process or procedure just isn’t working as it should.

If you qualify for our assistance, which is always free, we will do everything possible to help you.

Note: TAS cannot prepare tax returns for you. If you need assistance with preparing a return, please utilize one of the preparation resources referenced above.

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Source: taxpayeradvocate.irs.gov