IR-2019-169, October 15, 2019
WASHINGTON —As part of National Work and Family Month, the Internal Revenue Service reminds military families that they often qualify for specific tax rules and benefits.
National Work and Family Month was established in 2003 by a Senate resolution. October was chosen to help communicate and celebrate progress towards creating more flexible work environments and helping individuals better balance their work-life commitments.
Members of the military and their families often qualify for tax benefits that could lower the tax they owe or allow them more time to file and pay their federal taxes. One of the key sources of information for military families is Publication 3, Armed Forces' Tax Guide. It is available on IRS.gov in English and Spanish.
Some military family tax benefits include:
Combat pay exclusion. Taxpayers may be able to exclude pay for service in a combat zone. But, they can choose to have their nontaxable combat pay included in their earned income for Earned Income Tax Credit purposes. Including nontaxable combat pay as earned income may decrease the amount of tax owed and may mean a larger refund. Taxpayers should calculate their taxes with the combat pay as earned income and without to find out what's best for them.
Deadline extensions for combat zones and contingency operations. The various extensions granted to combat zone participants to file returns or pay taxes now also apply to military members serving in contingency operations outside the U.S. There are also deadline extensions available to military families living outside the United States. For more details see Publication 3.
Deduction of overnight travel expenses. Members of reserve components (including the National Guard) who stay overnight more than 100 miles from home while in service (for drill or other official duties) may deduct unreimbursed travel expenses.
Moving expenses may be tax deductible. If a member of the military moves because of a permanent change of station, they can deduct the reasonable unreimbursed expenses of moving for themselves and members of their household.
Sale of principal residence. Members of the military may not have to pay tax on all or part of any gain from the sale of their main home. This benefit depends on how long the taxpayer owns and lives in the home. However, those time rules can be suspended for military members on qualified official extended duty.
Dependent care assistance programs. Dependent care assistance programs for military personnel are generally not incuded in their income.
Military academy attendees. Generally, there is a 10% tax on payments from a Qualified Tuition Program or Coverdell Education Savings Account that are not used for educational expenses. However, the tax does not apply to attendees of the U.S. Military, Naval, Air Force, Coast Guard or Merchant Marine Academies, to the extent the payments do not exceed the costs of advanced education.
Get free tax help during the tax filing season. The IRS offers free tax help to members of the military and their families through the Volunteer Income Tax Assistance program. A VITA site is easy to find on or off base — even overseas. Use the IRS VITA/TCE Locator tool or contact your installation's legal office.
As part of National Work and Family month, the IRS also reminds military families about opportunities available within the agency. The IRS Veterans' Employment Program Office is designed to provide quality training and work experience to wounded warriors and veterans.
The program helps veterans who qualify for special hiring authority seek employment at the IRS and also offers them non-paid internship opportunities. The program also helps veterans develop their resumes, better understand the federal hiring process and search for employment within the IRS or other federal agencies.