Tax Benefits for Members of the Military

May is National Military Appreciation Month!

The IRS wants you to know about the many tax benefits available to members of the military and their families.

1. The Voluntary Income Tax Assistance (VITA) program partners with the military to provide free tax preparation to service members and their families at bases in the USA and around the world.
2.  If a service member prepares their own return the IRS provides free electronic filing using the IRS Free File program.
3. Combat pay is partly or fully tax free.
4. Service members stationed abroad have until June 15^th to file their federal income tax return.  Those serving in a combat zone have even longer to file their returns.  They have until 180 days after they leave the combat zone to file.
5. Eligible unreimbursed moving expenses are deductible.
6. Reservists whose duties take them more than 100 miles from home can deduct their unreimbursed travel expenses even if they don’t itemize their deductions.
7. Low and moderate income service members often qualify for additional tax benefits such the Earned Income Tax Credit.
8.  Low and moderate income service members who contribute to an IRA can often claim the retirement savings contributions credit. 

Feel free to call our office to find out more information!

By: Chris Murphy, Senior Accounting Manager

Who Else Is Using Your Identity?

These days it seems like everyone knows someone who has had their credit card hacked, been scammed over the phone or computer.  Even the IRS is grappling with the issue of fraud and identity theft.  According to the IRS, identity theft tax refund fraud is its number one fraud.  This happens when someone steals an individual’s personal information, files a fraudulent tax return using someone else’s social security number and has the refund deposited into their own account.  Often, the victim is unaware of what happened until they try to file their own tax return.

Year-End Tax Tips

1.      Review your portfolio.  Consider taking a loss if you have substantial capital gains.

2.      Max out your retirement plan contributions.  2014 maximum IRA contribution is $5,500 (plus $1,000 if age 50 or over).  2014 maximum 401(k) contribution is $17,500 (plus $5,500 if age 50 or over).

3.      Consider contributing to a 529 Plan if you have children or grandchildren.  For example, New York allows a deduction up to $5,000 (or $10,000 for married filing joint filers) for contributions made by an account owner to an account belonging to New York’s 529 College Savings Plan.