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U.S. Armed Forces & Taxes: Beta

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Sandy Botkin

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Sandy is a CPA, Tax Attorney, and former IRS trainer. He has authored many helpful books on the subject of taxes, including 7 Simple Ways to Legally Avoid Paying Taxes ( Click Here ), Lower Your Taxes: Big Time ( Click Here ), and Real Estate Tax Secrets of the Rich ( Click Here ).
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Part 2: Tax benefits of being in the military…

Military Base Realignment and Closure Benefit

Here is one benefit that I would bet many military personnel don’t know about.. Payments made under the Homeowner’s Assistance Program (HAP) are generally excludable from income. Isn’t that nice? Thus, if the soldier is transferred or the base is closed, the government will subsidize a drop in house value. There are some limit do this, however. The limit is 95% of the fair market value of the property for which payments were made before the announcement of the base closure minus the fair market value at the time of sale.

NOTE: Some states may impose a tax on the HAP benefits.

Moving Expenses

The new tax law eliminated the deduction for moving expenses for most people EXCEPT for members of the Armed Forces on active duty and for their dependents and spouses who, pursuant to a military order, had a change in change of station. Thus, active duty military personnel can still deduct moving expenses. 

What this means: Military personnel can deduct out of pocket costs of moving the person’s household, family and pets to another post of duty.

Armed Forces Reservist’s Travel Costs

Members of the Armed Forces reserve who must travel more than 100 miles away from home to fulfill their training and service commitments can claim a deduction from gross income for the cost of transportation, meals (subject to the 50% meal limitation) and lodging. The deductible amounts are generally limited to the Federal Per Diem Rate in that area.

Note: if you use your own vehicle to travel, you can deduct 58 cents per mile.for this travel.

Example: Captain Rock, a member of the Army Reserve, had $1,555 of unreimbursed travel.expenses related to work in his reserves that took him 220 miles from home in 2019. The travel expenses consisted of $255 for mileage (440 miles times 58 cents per mile), $300 for meals, and $1,000 for lodging. Only 50% of the meals are deductible and 100% of everything else. 

Uniforms

Generally cost of maintaining uniforms are deductible;, however, interestingly, if military regulations prohibit the Armed Forces member from wearing certain uniforms when off duty, the cost and upkeep of the uniforms ( reduced by any reimbursement) is deductible. “Huh, who would have thought?”

Look for the other parts of this series on the Taxbot blog.


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Sandy Botkin

Sandy is a CPA, Tax Attorney, and former IRS trainer. He has authored many helpful books on the subject of taxes, including 7 Simple Ways to Legally Avoid Paying Taxes ( Click Here ), Lower Your Taxes: Big Time ( Click Here ), and Real Estate Tax Secrets of the Rich ( Click Here ).

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