How the Tax Code Adapts for Members of the Military

By Elizabeth Rosen

NEW YORK (IRS.com) — There are many challenges that come with serving in the military, but worrying about managing your taxes shouldn’t be one of them. Fortunately, there is tax help for military service personnel so you can work on developing a tax strategy that saves you time and money.

U.S. Armed Forces personnel and their families may face more tax-planning concerns than civilians because of frequent moves and the nature of their duties. To ease some of these burdens, the U.S. government has granted a number of special tax benefits to military personnel. If you are serving in the armed forces, consider taking full advantage of these tax breaks, especially the generous benefits available for those serving in combat zones.

If you are a member of the military on active duty and you have to move because of a permanent change of station, you may be able to deduct some of your moving expenses on your income tax return. The allowed deductible expenses include unreimbursed costs of moving, travel, storing and insuring household goods and personal items.

If you are a member of the armed forces and are selling your home, up to $250,000 (or $500,000 for married couples) of capital gains on the sale is tax free. Additionally, the usual requirement that a homeowner live in a personal residence for two of the past five years is extended to 10 years for active-duty service members.

Work-related travel expenses are generally deductible for military personnel if they are unreimbursed and are incurred while traveling away from home. If you are on a permanent duty assignment, it’s important to remember that your duty station is considered your home (regardless of where your spouse or children may live). Expenses for personal travel, such as visits to family while on leave, are not deductible. If you are a member of the U.S. Armed Forces Reserves, you are allowed to deduct unreimbursed travel expenses for traveling more than 100 miles away from home to perform your reserve duties. Note that it is not necessary to itemize these tax deductions because the eligible expenses are deducted as an adjustment to your income.

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