April 15, 2024

Jocuri

Mad about real estate

8 Tax Tips for Veterans

1. Keep Records

To qualify and receive most Veterans’ tax benefits, you will need to verify your status as a U.S. Veteran. Therefore, it is important to keep your records in a safe place with your other financial documents. If you do lose any of these records, you will need to contact the Department of Veterans Affairs to obtain new ones.  

2. Know About Property Tax Exemptions

There are a few types of property tax exemptions available to Veterans. The first is the Veterans’ Real Property Tax Exemption that allows a qualifying Vet to take a partial exemption for property purchased with eligible funds. The second is the Cold War Veterans Exemption, which exempts those who fought in the cold war from paying property taxes. However, some counties and cities have opted out of this program so be sure to check with your local tax department.  

Last but not least, the alternative Veterans exemption is available to Veterans with residential property that have served during wartime and/or received an expeditionary medal. Similar to the Cold War Veterans Exemption, some local governments may opt out of offering this exemption. With any property tax exemptions you should always speak with a local tax professional to make sure you do not pay any taxes that you are not required to.

3. Taxes on Income and Retirement

Unfortunately, any income you receive from the military that is based on age or length of service is taxable income and must be included on your tax return. However, you will usually not have the standard taxes withheld from your checks like you would with a standard paycheck.

4. American Recovery and Reinvestment Act

The American Recovery and Reinvestment Act of 2009 provided some assistance to struggling families and businesses through the making work pay tax credit. However, the credit unfortunately created problems for many veterans. After it was enacted, the new law reduced the amount of money being taken out of American worker’s paychecks. Although Veterans are not eligible for the credit, they will still have fewer taxes withheld as part of the new “one-size-fits-all” IRS guidelines. Therefore, you may be surprised to find you owe a significant tax liability in April.  

5. Track your Tax Liability

Because of the problems created by the American Recovery and Reinvestment Act, as well as the fact that taxes are not withheld from military payments, it is import to keep track of tax liability. If you are going to owe the IRS money, then you might want to make an estimated tax payment to prevent unnecessary fees or penalties. Alternatively, you may want to adjust your withholdings. If you feel you may end up owing taxes due to the change, you may want to consult with a tax preparer for the best way to counter-act the change.

6. Check State Benefits

In addition to the Federal tax benefits offered to Veterans, many state and local governments offer benefits as well. However, you will need to check with your state’s tax collection agency and possibly a local tax professional to find out exactly what options are available to you.

7. Job Search Assistance

If you are a Veteran who has to go back to the regular workforce, then you may be able to take advantage of a specific set of tax incentives. On your next tax return you can deduct expenses paid for creating a résumé, telephone call fees to prospective employers, employment agency fees, and any traveling expenses related to your job hunt.  

8. Free Tax Filing

Many military personnel and their families will qualify to receive free online tax filing through the IRS website. Qualifying factors may change by location and situation so be sure to check with your local tax authorities and the IRS.gov website for more information.