ASE Group proudly supports the military and all the men and women, past and present, who have risked their lives for our freedom. Let me start this post out by extending a sincere and heartfelt thank you.
For all that you’ve done for us, we want to highlight the benefits that military service members receive to help make sure you get the most out of your taxes. The following benefits are not secrets or loopholes by any means, but often get overlooked when tax season rolls around.
Not all income is taxable
If you serve in a combat zone, your combat pay is partially or fully tax-free. If you serve in support of a combat zone, you may also qualify for this exclusion. You are also eligible for tax exemptions on allowances received for living and family expenses, uniforms, death expenditures, moving and travel costs. Moving expenses not reimbursed can be deducted on Form 3903 which normally applies if the move is due to a permanent change of station.
While some or all of combat pay is nontaxable, you have the option to choose to include it in your taxable income. By doing so, it may help boost your earned income tax credit which means you’d owe less tax and get a larger refund. We recommend consulting a tax professional, like ASE Group, to guide you and determine if this is the best option for you.
Active military serving in combat zones or stationed abroad are eligible for automatic filing extensions and extended deadlines to pay their taxes. You have 180 days from either the date you return from the combat zone or from your last date of continuous hospitalization for injuries received while serving in a combat zone to file your return. The 180 days are in addition to the number of days you had left to file when you entered the combat zone. During this extension, no interest or penalties are charged.
When your duty is over or you receive discharge and return to civilian life, you may be able to deduct job search expenses when looking for work. Things like travel costs, resume preparation, and job placement agency fees may be eligible for deduction.
Veterans may be eligible for a federal tax refund based on:
An increase in the veteran's percentage of disability from the Department of Veterans Affairs (which may include a retroactive determination)
The combat-disabled veteran applying for, and being granted, Combat-Related Special Compensation, after an award for Concurrent Retirement and Disability.
Veterans in New Jersey specifically are eligible for a $6,000 exemption ($3,000 for Tax Years 2017 and 2018) on your income tax return if you are a military veteran who was honorably discharged or released under honorable circumstances from active duty in the Armed Forces of the United States on or any time before the last day of the tax year. More information about claiming this exemption can be found at https://www.state.nj.us/treasury/taxation/military/vetexemption.shtml. At ASE Group, we’ll always inquire about your potential military veteran status to make sure you don’t miss out on this state-specific exemption, and we’ll guide you through the process of submitting the required documentation.
Military/veteran benefits and tax exemptions vary by state. It is best to consult with your local tax professional to determine how to maximize your benefits and tax refund. ASE Group proudly offers free consultations for all military personnel and their spouses to discuss tax preparation and the best options that suit your individual needs.
Thank you. For your service. For your sacrifice. For your selflessness.