MILITARY LIFE

16 TAX TIPS MADE FOR MILITARY LIFE

As a service member, the tax implications of combat pay, deployment or multiple moves can be daunting. This tax season you may also have questions related to the COVID-19 pandemic and federal relief efforts. Military OneSource MilTax services – designed specifically for the MilLife – can make tax time easier ‒ and help maximize your tax refund.

With MilTax ( militaryonesource.mil/financial-legal/tax-resource-center/miltax-military-tax-services), service members have quick access to tax consultants who can answer your questions about the tax code and how it applies to military life, as well as easy, free and secure preparation and tax filing software ( militaryonesource.mil/miltax-software). All MilTax services are 100% free with no hidden surprises, so take advantage of MilTax to save money and time this tax season.

TAX TIP 1: GATHER TAX DOCUMENTS FIRST

TAX TIP 1: GATHER TAX DOCUMENTS FIRST Before filing, organize paperwork and establish a specific place for all incoming tax documents ( militaryonesource.mil/financial-legal/tax-resource-center/preparing-filing-and-refunds/making-tax-filing-simple), like W-2 forms, as they arrive in the new year. You may need to track down others. You'll also need Social Security numbers, birth dates and other information for everyone included in the return.

return. Take another look at that Leave and Earnings Statement ( militaryonesource.mil/military-life-cycle/new-to-the-military/getting- settled/your-leave-and-earnings-statement) withholding. Taxpayers will want to check to see if their 2020 federal income tax withholding will unexpectedly fall short of their tax liability for the year. They can check this by using the Tax Withholding Estimator on IRS.gov ( irs.gov/individuals/tax-withholding-estimator). Not sure of all the documentation you'll need? Contact a MilTax consultant ( militaryonesource.mil/financial-legal/tax-resource-center/miltax-military-tax-services) for free help on which documents you'll need to file for your specific situation

TAX TIP 2: CONFIRM THAT YOU RECEIVED YOUR COVID-19 ECONOMIC IMPACT PAYMENT

If eligible, you should have received $1,200 ($2,400 if you are married) and $500 for each qualifying child under the 2020 Coronavirus Aid, Relief and Economic Security Act. If you did not, you may claim the Recovery Rebate Credit ( irs.gov/news-room/recovery-rebate-credit) on your federal tax return.

TAX TIP 3: REPORT ANY UNEMPLOYMENT BENEFITS AS INCOME

If you or your spouse were among the millions of workers who received unemployment compensation in 2020, you must report it as income on your tax return. You will receive a 1099-G ( irs.gov/pub/irs-pdf/f1099g.pdf) in the mail that states your total received, including special unemployment compensation under the CARES Act.

TAX TIP 4: DEDUCT YOUR CHARITABLE DONATIONS

The CARES Act allows taxpayers to deduct up to $300 in cash donations to eligible charities without itemizing the contributions. Go to the IRS's Tax Exempt Organization Search ( irs.gov/charities-non-profits/tax-exempt-organization-search) to find out whether the charities you gave to in 2020 qualify.

TAX TIP 5: CONTACT MILTAX WITH YOUR TAX QUESTIONS.

Stuck? Questions? Unsure of the next step? Let MilTax take the stress out of tax season ( militaryonesource.mil/financial-legal/tax-resource-center/miltax-military-tax-services). Military OneSource's tax consultants can answer your questions, and our free tax preparation and e-filing software makes filing your returns fast and simple. Call 800-342-9647 or live chat ( livechat.militaryonesourceconnect.org/chat) 24/7 to schedule an appointment with a MilTax consultant to get answers to your tax questions.

TAX TIP 6: DETERMINE IF TAKING THE STANDARD DEDUCTION IS A BETTER DEAL FOR YOU

The standard deduction for married filing jointly is $24,800 for tax year 2020. For single taxpayers and married individuals filing separately, the standard deduction is $12,400 for 2020, and for heads of households, the standard deduction is $18,650 in 2020.

TAX TIME TIPS: Military OneSource's tax consultants can answer your questions, and our free tax preparation and efiling software makes filing your returns fast and simple.

TAX TIP 7: GET TAX CREDITS, DEDUCTIONS AND EXCLUSIONS FOR YOUR CLASSES AND MUCH MORE

The IRS allows you to take certain tax credits on your tax returns, including: 

• The Lifetime Learning Credit ( irs.gov/credits-deductions/individuals/llc) is for qualified tuition and related expenses paid for eligible students enrolled in an eligible educational institution. The LLC can help pay for undergraduate, graduate and professional degree courses – including courses to acquire or improve job skills. There is no limit on the number of years you can claim the credit. It is worth up to $2,000 per tax return and applies to 20% of the first $10,000 of a taxpayer's out-of-pocket expenses.

• The Earned Income Credit ( irs.gov/credits-deductions/individuals/earned-income-tax-credit/earned-income-tax-credit-income-limits-and-maximum-credit-amounts) up to $6,660 for taxpayers filing jointly who have three or more qualifying children; check out income and credit amounts.

• The Child Tax Credit ( irs.gov/publications/p972) maximum amount of credit is $2,000 per qualifying child and is refundable up to $1,400, subject to phase outs. The bill also includes a temporary $500 nonrefundable credit for other qualifying dependents ( irs.gov/publications/p972#en_US_2018_publink10002676).

• The maximum credit allowed for adoptions is the amount of qualified adoption expenses up to $14,300 in 2020. This credit is nonrefundable, which means it's limited to your tax liability for the year. However, any credit in excess of your tax liability may be carried forward for up to five years.

While the IRS allows taxpayers who itemize to deduct a range of expenses, alimony payments were no longer deductible starting in tax year 2019; the recipient does not have to report alimony as income any more either.

Meanwhile, one exclusion common among military families is the foreign earned income exclusion, which is up to $107,600 for tax year 2020.

For more information about these or other credits, deductions or exclusions, contact a MilTax consultant ( militaryone-source.mil/financial-legal/tax-resource-center/miltax-military-tax-services) about your specific situation.

TAX TIP 8: TAKE ADVANTAGE OF THE MILITARY SPOUSE RESIDENCY RELIEF ACT.

Active-duty service members have always been able to keep one state as their state of legal residency for tax purposes – typically their home of record – even when they move frequently on military orders. A state of legal residence is also considered their "domicile" or "resident" state. Since 2009, when the Military Spouse Residency Relief act was signed, military spouses may keep their state of residency to that of the service member, regardless of which state they currently reside.

TAX TIP 9: GET AUTOMATIC TAX EXTENSIONS WHEN YOU'RE DEPLOYED

When you're deployed, your service wants you to focus on your mission, not your tax forms. The IRS automatically extends tax deadlines for U.S. Armed Forces personnel deployed to a combat zone ( militaryonesource.mil/financial-legal/tax-resource-center/special-tax-considerations/ins-and-outs-of-filing-military-taxes-when-you-are-deployed) or in support of operations in a qualified hazardous duty area. The deadline for filing returns, making payments or taking any other action with the IRS is also extended for at least 180 days after the last day of qualifying combat zone service or the last day of any continuous qualified hospitalization for injury from service in the combat zone.

TAX TIP 10: EXCLUDE HOME SALE PROFITS FROM YOUR TAXES

Many military families buy a home knowing they may have to sell it when their next PCS comes around. It's important to know about capital gains tax ahead of time. If you make a profit from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income, or up to $500,000 of that gain if you file a joint return with your spouse. This is called the Sale of Primary Home Capital Gain Exclusion.

To be eligible for this exclusion, most people must have owned the home for at least two years and lived in that home for at least two of the last five years. However, service members who have moved due to PCS before being able to meet these requirements, may still qualify for an exclusion ( irs.gov/publications/p523). In those cases, they may not be taxed with the total capital gain for the sale of the home.

TAX TIP 11: DON'T WORRY ABOUT THE PENALTY FOR NOT MAINTAINING MINIMUM ESSENTIAL HEALTH COVERAGE.

The individual mandate in the Affordable Care Act was lifted last year. This means that you will not pay a penalty if you did not have health insurance in 2020.

TAX TIP 12: REPORT AND CLAIM CASUALTY LOSSES FROM DISASTERS

If you have property in an area determined by the president to be eligible for federal assistance – such as a region devastated by a hurricane or forest fire eligible for assistance from FEMA – you can claim unreimbursed expenses from casualty losses on your federal tax return.

If you are eligible to claim a loss on your tax filing, use IRS Form 4684, "Casualties and Thefts" ( irs.gov/forms-pubs/about-form-4684). Refer to IRS Publication 547 ("Casualties, Disasters, and Thefts" irs.gov/forms-pubs/about-publication-547) and Publication 584 ("Casualty, Disaster, and Theft Loss Workbook" irs.gov/forms-pubs/about-publication-584) for more detailed information. Additional resources ( irs.gov/businesses/small-businesses-self-employed/disaster-assistance-and-emergency-relief-for-individuals-and-businesses) can be found on the IRS website, and MilTax consultants can help you sort out your specific tax situation for free ( mili- taryonesource.mil/financial-legal/tax-resource-center/miltax-military-tax-services).

TAX TIP 13: DON'T IGNORE A CORRECTED W-2 FORM

If you receive a corrected W-2, or W-2C, and have filed a tax return for the year covered by the form, then file an amended tax return for the year the corrected W-2 covers. If you have not yet filed a return for the year covered by the W-2C, use the W-2C when filing your initial return.

TAX TIP 14: REACH OUT IF YOU SPOT AN ISSUE

If something doesn't look right on your W-2:

• Call the Military Pay customer care center at 888-3327411 to request a corrected W-2.

TAX TIP 15: KNOW ABOUT TAX DEDUCTIONS FOR RESERVISTS

Reservists whose reserve-related duties take them more than 100 miles away from home each way, can deduct their unreimbursed travel expenses on Form 2106, even if they do not itemize their deductions. They can also deduct the purchase and upkeep costs of certain uniforms that they can't wear while off duty, minus any allowance they receive for these costs. Taxpayers can request a free transcript of tax returns covering the past three years. The Get Transcript tool ( irs.gov/individuals/get-transcript) on IRS.gov is the fastest way to get a transcript. If you have any questions about special tax situations for National Guard or reservists, contact a MilTax consultant for a free consultation ( militaryonesource.mil/financial-legal/tax-resource-center/miltax-military-tax-services).

TAX TIP 16: REMEMBER YOUR RETIREMENT PLAN CONTRIBUTIONS

An IRA or 401(k)-type plan might mean saving for retirement and cutting taxes at the same time. Service members who contribute to a plan, such as the Thrift Savings Plan ( militaryone-source.mil/military-life-cycle/new-to-the-military/getting-connected/thrift-savings-plan-options-making-your-retirement-dollars-work-for-you), may also be able to claim the Retirement Savings Contributions Credit, or Saver's Credit.

IRAs are different from 401(k)s and TSPs. By the end of the year, a single person can make an IRA contribution of $6,000, or $7,000 if you are age 50 or older, or your taxable compensation for the year was less than this dollar limit. If you file a joint return and have taxable compensation, you and your spouse can both contribute to your own separate IRAs. You can contribute up to $6,000 to a spousal IRA in 2020 or $7,000 if you are 50 or older.

In a 401(k) or TSP, you can contribute the maximum of $19,500. If you are 50 or older, you can make an additional catch-up contribution for as much as $6,500, for a total of up to $25,000.

There are two kinds of IRAs – traditional and Roth. The Roth is pre-taxed and can be withdrawn after the age of 59½ without penalty. The traditional is taxed at the time of withdrawal and will be penalized if you are not 59½. You can deduct your contributions if you qualify with a traditional IRA, but Roth IRA contributions are not deductible.

Taxes are complicated. Remember that our 100% free MilTax services – both our expert military tax consultants and e-filing tax preparation software – stand ready to make tax season easy for you. Call 800-342-9647 for 24/7 help. Learn more about MilTax at militaryonesource.mil/financial-legal/tax-resource-center/miltax-military-tax-services

EXPANDED HOURLY CHILD CARE SERVICE

To help meet the growing and diverse needs of military parents, the Department of Defense is proud to offer an expanded child care service for members and their families.

Through Military OneSource, military families now have free access to a national database of more than a million caregivers so they can find hourly, flexible and on-demand child care.

BACKGROUND FOR EXPANDED HOURLY CHILD CARE SERVICE

Child care is a workforce issue that directly impacts the readiness and retention of the total force. Lack of child care options has been connected to challenges for spouse employment and increased stress. Some evidence suggests it also impacts retention decisions.

THE DEPARTMENT OF DEFENSE OFFERS MORE OPTIONS TO SUPPORT THE NEED FOR HOURLY CHILD CARE

As part of its ongoing commitment to help military families thrive, The Department of Defense is introducing a new way for military families to find child care for hourly, flexible and on-demand needs.

By expanding child care options, the Department of Defense helps:

• Support the growing and diverse needs of military families

• Increase the number of military families who receive support

• Ensure force readiness and lethality

BENEFITS OF THE EXPANDED HOURLY CHILD CARE SERVICE

The nationally recognized online subscription service is:

• Easy to access

• Fee-free through Military OneSource for anyone eligible for Military OneSource services (visit MilitaryOneSource.mil to learn more at militaryonesource.mil/confidential-help/non-medical-counseling/military-onesource/eligibility-for-confidential-non-medical-support-services)

• Convenient and flexible Parents can:

• Access a database of more than a million care providers

• Search at their convenience for care that meets their own needs and criteria

• Find potential care providers

• Check references

• Review background checks

• Interview, hire and pay providers on their terms

HOW CAN PARENTS ACCESS THE EXPANDED HOURLY CHILD CARE SERVICE?

The new caregiver search service is available 24/7/365 through Military OneSource. Parents can visit the Expanded Hourly Child Care Options page ( militaryonesource.mil/family-relationships/parenting-and-children/military-childcare-services) and click "Log in to access." If they already have a Military OneSource account, they can log in. If not, they will need to create one. From there, they will be directed to Military OneSource Member Connect, where they will receive a unique member code and a link to the child care service site. Parents can then create their login and begin searching for child care. In the future, they can return directly to the child care service's homepage to access care and search for providers.

EXPANDED HOURLY CHILD CARE SERVICE COMPLEMENTS EXISTING PROGRAMS

This online service is available in addition to existing child care options such as:

• Finding full-time, on-installation care through MilitaryChildCare.com ( public.militarychildcare.csd.disa.mil/mccu/ui)

• Receiving child care fee assistance for off-installation care through Child Care Aware of America ( childcareaware.org)

• Checking with their local installation child development center ( installations.militaryonesource.mil/?looking-for-a=program/program-service=29/focus=program) about child care options, or speaking with a Military OneSource consultant who can provide options based on specific child care needs

(Consultants are available 24/7/365 by calling 800-3429647. OCONUS dialing options and live chat are also available.)

For more information about military child care programs, parents can visit the Military OneSource Military Child Care Programs page at militaryonesource.mil/family-relationships/parenting-and-children/childcare/military-child-care-programs .