MONEY MANAGEMENTFrom the Virginia Society of Certified Public Accountants - Presented by Dean Knepper, CPA, CFP®
TAX TIPS FOR VETERANS AND MEMBERS OF THE MILITARY
(November 2007) -- On Veterans 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 Virginia Society of CPAs believes it is important that they know about the special tax relief available from the U.S. government.
Veterans’ 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. Veterans’ benefits include:
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 Internal Revenue Service (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 (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.
The Virginia Society of CPAs is the leading professional association dedicated to enhancing the success of all CPAs and their profession by communicating information and vision, promoting professionalism, and advocating members’ interests. Founded in 1909, the Society has nearly 8,000 members who work in public accounting, industry, government and education. This Money Management column and other financial news articles can be found in the Press Room on the VSCPA Web site at www.vscpa.com.
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