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News | Feb. 24, 2015

Tax Season: What You Need to Know

By Legal Assistance Directorate

When does tax season start and end? The tax season began January 20th and ends April 15th for people in the United States and June 15th for those stationed overseas.  Those stationed in combat zones get an automatic extension of 180 days from the last date that the member is in a combat zone.

Are there any new tax laws or benefits this year that service members should be aware of before filing their taxes? The Affordable Care Act requires that all Americans maintain a minimum level of health insurance.  The majority of Tricare programs elected by Servicemembers and their dependents qualify for the minimum required level of health insurance.  Some Tricare Plus/direct care, line-of-duty care, and transitional care users might find their limited coverage does not meet the minimum essential coverage.  Tricare Plus users who combine their coverage with Tricare Standard or Tricare For Life do meet the minimum coverage requirements.  For more information, please read TRICARE and the Affordable Care Act.

Are there ways in which it would be more beneficial for military members to pay for services offered by places such as H&R Block versus using free services offered through the VITA program? Military members, reservists, and their dependents can use the H&R Block software at no cost through Military One Source (MOS).  The Department of Defense has partnered with MOS to provide tax consultation to all active duty service members, reservists, and their dependents.  Signing up for MOS is simple and can be done from the comfort of one’s home without the help of our staff or at one of the many military VITA sites located throughout the world.  MOS also provides personal phone help from trained tax consultants seven days a week from 0700 to 2300.  Qualifying customers can file their federal return and up to three state returns at absolutely no cost. The service provided by MOS eliminates the need for any service member to have to pay anything to have their tax return processed.

How would someone go about contacting their nearest VITA representative? VITA tax officers publicize the program by using base newspapers, articles in a command’s plan of the week, and group email messages to command members.  If a person wants more information on the VITA program they should contact their local Region Legal Service Office to find the branch office nearest to them.

When does the VITA program open and how long does it run for? Most VITA programs start within a week or two after January 25th.  They continue operating until the end of the tax season which is April 15th or June 15th, depending on location.

Who staffs it and what training do they receive? VITA is staffed by volunteers, limited duty personnel, and personnel sent TAD from their host commands.  They are trained using the IRS’s “Link and Learn” software and are required to pass competency tests to qualify to serve in a Navy VITA center.

Who is eligible to use VITA? Active duty, reservists on active duty, dependents and retirees are eligible.  Civilian GS employees are eligible for VITA services overseas.  Please note that retirees do not qualify for Military One Source.  However, retirees can file using a free file alliance website such as TurboTax or TaxAct, as long as their adjusted gross income (AGI) is less than $60,000.  If a retiree’s AGI is over $60,000, they might have to pay to file their tax return at a Navy VITA site.

What are the most typical items or documents service members will be required to have in order to have their tax returns prepared? Income and interest statements, SSNs and DOB for all family members, Employee Identification Number (EIN) for child care providers, and bank routing and account numbers.

What types of tax filing extensions are offered to personnel who are deployed or have deployed in combat zones? Members get an automatic extension of 180 days after the last day they are stationed in a combat zone.

What are some of the most common misconceptions and tax filing mistakes for personnel serving in combat zones? The most common mistakes are: (1) Thinking you need to file an extension (Form 8809); (2) Thinking an extension of time to file is an extension to pay any tax owed; and (3) Thinking that since military pay is nontaxable, all other income and interest must also be nontaxable.

What types of tax breaks or filing extensions are in place for service members who are deployed overseas? For those in places designated as combat zones, military pay is nontaxable.  Also, such service members get a filing extension of 180 days.  Activated reservists have special benefits regarding rollover of IRAs.

What is one of the most common tax filing mistakes for personnel deployed overseas? Make sure that you are aware of the Foreign Income Tax Exclusion if your spouse works in the local economy overseas.

Are spouses of deployed service members able to use a power of attorney to file on behalf of the deployed military member? Yes.  The spouse must use a special power of attorney.  The spouse can get one from the local Region Legal Service Office or the spouse can go to the IRS website to download Form 2848.

How much money did VITA save service members last year? The average client had a federal refund of $1,679.68.  The VITA program in 2014 prepared about 6,349 returns for a total refund of about $10.6 million.  If those VITA clients would have purchased the TurboTax Deluxe program last year at $49.99, they would have spent a total of $317,386.  

What should Sailors do to help ensure their taxes are done correctly? Why is it important that they do them correctly?
Check DOB and SSN for family members carefully.  That is the biggest reason for rejected returns.  Double check the bank routing and account numbers. For recently married persons, check the name on your Social Security cards.  Use your maiden name unless you have already changed your name with Social Security. For those with longer or hyphenated names, check the Social Security card.  Your name must exactly match what is on the card. For single parents, make sure that you know who is authorized to claim the child for tax purposes. Biggest credits for enlisted are usually Child Tax Credit, EITC, the Child and Dependent Care Credit, and the Lifetime Learning Credit.
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