Military Tax Deductions

The "U.S. Armed Forces' Tax Deduction Guide"

The Internal Revenue Service Publication 3, "Armed Forces' Tax Guide," helps military personnel and families take advantage of tax deductions and support for special tax situations that those serving in the Army, Navy, Air Force, Marines and Coast Guard are entitled to. Many service members make the mistake of taking the easiest route and use the shortest, simplest form. This could cost them dearly in savings.

It is estimated that 80 percent or more of active service members will file the 1040-EZ because they don’t own property or have many investments to claim, but there could be many tax deductions they are missing!

TurboTax Military Edition is a great tool for service members that marry and file jointly or have property, investments and charitable donations to consider. The TurboTax "Mission 2 Match" supports Operation Homefront for our troops!

With TurboTax you can take the complications out of longer tax forms and easily take advantage of subtle differences in tax laws that pertain only to service members. Top tips for military members that use TurboTax to file their taxes include many tax deductions specifically designed for armed force personnel that are easy to miss without proper military tax software.

Popular & Commonly Used Military Tax Deductions

Moving Expenses

Each military branch pays for the relocation of any military members they transfer who are not married or don’t have families.

If the service member is married, the government provides (the service member) with 95 percent of the cost considered standard to relocate a family to a new active duty location." Armed force personnel who move due to a change of duty location can deduct what the government considers “reasonable unreimbursed moving expenses” for relocating themselves and their families. The rest may be reimbursed or deducted, depending on the situation.

ROTC Student Training

Students participating in advanced training who receive subsistence allowances are NOT taxed for that allowance. However, active duty payment for events like advanced summer training camp are taxable.

Reserve Duty Travel Expenses

Active reservists who travel 100 or more miles from home for reserve duty may deduct the standard mileage rate for unreimbursed travel expenses, and charge off lodging and half the cost of their meals from traveling 100 or more miles for duty.

Uniform Cleaning and Upkeep

Each military branch issues uniforms to their members along with a monthly clothing allowance for upkeep. Expenses exceeding this allowance may be deducted as unreimbursed employee expenses subject to 2% of their adjusted gross income on itemized deductions.

While many service members are required to wear camouflage, they are not required to wear their dress uniforms except on special occasions. Therefore, Dress uniforms are not considered a regular uniform and do Not qualify under the uniform upkeep deduction for reimbursement unless a special military event requires them to wear the dress uniform. In this case the maintenance costs may be an itemized deduction.

Military Retirement Life Transitions

A civilian life transition program is offered to military service members that helps them prepare for life after the military service.

Costs incurred in this transition program like job-hunting expenses for transitioning between military service and civilian life may be deducted. These deductible expenses include job search travel costs, resume preparation and job placement fees.

Combat Zone Pay Exclusions

U.S. Armed Forces Members who serve in combat zones may exclude “combat pay,” from their income. The IRS allows those who are enlisted members, warrant officers and commissioned warrant officers to exclude various forms of pay form their income tax return, including:

  • Active duty pay earned while serving in a combat zone.
  • Imminent danger hostile fire pay.
  • Accrued leave pay earned while serving in a combat zone.
  • Pay earned while hospitalized from service in a combat zone.
  • Re-enlistment bonuses for voluntary re-enlistment during a month while serving in a combat zone.

Commissioned officers can also exclude part of their combat pay, However, their exclusion is capped at the highest rate of enlisted pay – plus any extra pay received for imminent danger or hostile fire.

Income Tax Filing Costs

Filing costs for tax documents including filing an extension, payment extensions, and claims extensions are all expenses related filing activities that can be deducted from your return. Additionally, if a military member is hospitalized due to injuries that were sustained in a combat zone, there are extensions that may be used to receive more filing time.

Forgiving Decedent’s Tax Liability

When a military member dies while in active combat zone service, their tax liability may be forgiven. Alternatively, if their tax liability has already been paid, a spouse may seek a to have those taxes refunded. However, when filing a joint return, only the decedent’s tax liability is eligible.