Tax Tips and Trivia


Service member's hand filling out tax forms and calendar with a red circle around 15 nearby

Protecting Americans from Tax Hikes Act

Under the Protecting Americans from Tax Hikes Act of 2015 (PATH Act), if you claim the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) on your tax return, the Internal Revenue Service must hold your refund until February 15. This new law requires the IRS to hold the entire refund—even the portion not associated with EITC or ACTC. The delay gives the IRS more time to help detect and prevent refund fraud.

State Taxes and Credits

File a state return for refundable credits such as the Earned Income Tax Credit.

Tax Tip: Lifetime Learning Credit

Lifetime learning credit can be used to help offset any post-high school education courses that lead to new or improved job skills.

Military Spouse Residency Relief Act

Active duty service members have always been able to keep one state as their state of legal residency (usually their Home of Record) for tax purposes even when they move frequently on military orders. A state of legal residence is also considered their "domicile" or "resident" state. This was not so for the nonmilitary spouse until the Military Spouse Residency Relief Act was signed in 2009. Since then, a nonmilitary spouse of a service member may be able to keep the same resident state of the military spouse regardless of which state they live in.

Sale of Primary Home Capital Gain Exclusion

Many military families buy a home knowing they'll have to sell it when their next PCS comes around. It pays to know about capital gains tax ahead of time. If you make a profit on the sale of your home, you can generally avoid paying capital gains taxes on up to $250,000 of that profit, or $500,000 if married filing jointly, every two years. To be eligible, you must have owned the home for at least two years and lived in that home for at least two of the last five years.

Extension of Time to File

File Form 4868, Extension of Time to File, by April 18, 2016 (April 19, 2016 if you live in Maine or Massachusetts) if you need more time to knock those taxes into order. Although you are not required to make a payment of the tax you estimate as due, Form 4868 does not extend the time to pay taxes. If you do not pay the amount due by the regular due date, you will owe interest. You may also be charged penalties.

Prior year filing

Military OneSource tax consultants can assist you with filing prior year tax returns. However, Military OneSource online filing only addresses the current tax year filing. Other tax services are available to help you complete prior year returns. Military OneSource tax consultants can provide information on how to select an alternative filing source. Call 800-342-9647 to talk to a consultant and get those prior year returns squared away.

Non-cash Charitable Contributions (Itemized Deductions)

Clothing and other items donated to charities, and ingredients for meals donated to soup kitchens can be deducted if you keep records. Many organizations that accept donations provide a list of recommended values for donated items based on their condition. You can also deduct the costs of gas and oil that are directly related to getting to and from the place where you volunteer. If you do not want to figure your actual costs, you can deduct 14 cents for each mile.

Student Loan Interest Paid by Parents

Generally, interest from a student loan can only be deducted if the person is legally required to repay the loan and actually paid the debt. However, if parents make student loan payments for a child who is no longer a dependent, that child can deduct the student loan interest paid by the parents. Itemizing deductions is not required to claim this interest deduction.

 

 


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