Tax Tips for Veterans and Members of the Military
On Veteran’s Day, we remember the heroic efforts and sacrifices made by
members of our nation’s military. Those who have served in the armed forces
should feel tremendous pride in their heroism. The Iowa Society of Certified
Public Accountants believes it is important that they know about the special
tax relief available from the U. S. government.
Veteran's pay is taxable, but benefits are
not
Military retirement pay that is based on age or length of service is
taxable, and must be included in your income. On the other hand, veterans’
disability retirement payments received from the U.S. Department of Veterans
Affairs are generally tax free. Veteran’s benefits administered by the
department are not includable in income. Veteran’s benefits include:
- Education, training, and subsistence allowances paid to veterans or
their families.
- Disability compensation and pension payments for disabilities paid
to veterans or their families.
- Grants paid by the Department of Veterans Affairs for homes designed
for wheelchair use or for vehicles for veterans who have lost their
sight or the use of their limbs.
- Veterans’ insurance proceeds and dividends paid to veterans or their
beneficiaries.
- Interest on insurance dividends left on deposit with the Department
of Veterans Affairs.
- Dependent-care assistance benefits.
- Death benefits paid to survivors of military personnel members who
died after September 10, 2001.
Keep your military records handy
To qualify for many benefits, and to verify your status as a veteran, you
may need access to your military records. You can find information on
obtaining those records at the Department of Veterans Affairs Web site at
www.va.gov/vaforms/.
Active members of the military
There are also tax accommodations for those who are currently on active duty
in the military. For example, the pay of enlisted personnel and warrant
officers serving in combat zones is tax free, as is commissioned officers’
pay up to certain limits. There’s no tax on pay during hospitalization for
those who were injured, within certain guidelines, and these soldiers don’t
have to file or pay taxes during that time.
Armed forces members who serve in designated combat zones and civilians
serving in support of these members, or those who are hospitalized outside
the United States as a result of an injury received in a combat zone, have
also been given extensions on filing and paying their taxes. They do not
have to file or pay taxes until 180 days after their last day in the combat
zone or hospitalization. The extension also generally applies to the spouses
of military personnel who are serving in combat zones.
More information can be found in IRS Publication 3, “Armed Forces’ Tax
Guide,” which is available online. Go to
www.irs.gov, then click on “Individuals” and look for “Tax
Information for Members of the U.S. Armed Forces.” You can also call the IRS
toll free at 1-800-829-1040.
Your CPA can help
For advice on what’s available to veterans, active military members, and
their families, turn to your local CPA. He or she can provide the answers
you need to ensure you or a loved one receive the appropriate tax relief.
Access “Find a CPA.”
