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Special Tax Benefits for Armed Forces Personnel
If you're a member of the U.S. Armed Forces, the IRS wants you to know about the many tax benefits that may apply to you. Special tax rules apply to military members on active duty, including those serving in combat zones. These rules can help lower your federal taxes and make it easier to file your tax return.
Here are ten of those benefits:
1. Deadline Extensions. Qualifying military members, including those who serve in a combat zone, can postpone some tax deadlines. This includes automatic extensions of time to file tax returns and pay taxes.
2. Combat Pay Exclusion. If you serve in a combat zone, you can exclude certain combat pay from your income. You won't need to show the exclusion on your tax return because qualified pay isn't included in the wages reported on your Form W-2, Wage and Tax Statement. Some service outside a combat zone also qualifies for this exclusion.
3. Earned Income Tax Credit. You can choose to include nontaxable combat pay as earned income to figure your EITC. You would make this choice if it increases your credit. Even if you do, the combat pay remains nontaxable.
4. Moving Expense Deduction. If you move due to a permanent change of station, you may be able to deduct some of your unreimbursed moving costs.
5. Uniform Deduction. You can deduct the costs and upkeep of certain uniforms that regulations prohibit you from wearing while off duty. You must reduce your expenses by any reimbursement you receive for these costs.
6. Signing Joint Returns. Both spouses normally must sign joint income tax returns. However, when one spouse is unavailable due to certain military duty or conditions, the other may, in some cases sign for both spouses, or will need a power of attorney to file a joint return.
7. Reservists' Travel Deduction. If you're a member of the U.S. Armed Forces Reserves, you may deduct certain travel expenses on your tax return. You can deduct unreimbursed expenses for traveling more than 100 miles away from home to perform your reserve duties.
8. Nontaxable ROTC Allowances. Educational and subsistence allowances paid to ROTC students participating in advanced training are not taxable. However, active duty pay, such as pay received during summer advanced camp, is taxable.
9. Civilian Life. After leaving the military, you may be able to deduct certain job hunting expenses. Expenses may include travel, resume preparation fees and job placement agency fees. Moving expenses may also be deductible.
10. Tax Help. Most military bases offer free tax preparation and filing assistance during the tax filing season. Some also offer free tax help after April 15.
You can learn more about these tax benefits in Publication 3, Armed Forces' Tax Guide. The booklet is available on IRS.gov or you can order it by calling 1-800-TAX-FORM (800-829-3676).
Additional IRS Resources:
* Publication 3, Armed Forces' Tax Guide
* Publication 521, Moving Expenses
* Publication 529, Miscellaneous Deductions
Visit IRS.gov this Summer for All Your Tax Needs
The IRS.gov website is a great resource for free tax help 24 hours a day, seven days a week. Our many online tools can help make it easier to file and pay your federal taxes. You can also learn about filing options, check the status of a refund, print tax forms and find out how to contact the IRS. ¨Here are twelve good reasons to visit IRS.gov this summer.
1. Use the Interactive Tax Assistant. This tool is a tax law resource that covers a number of topics. The ITA is easy to use as it leads you through a series of questions and provides responses to your tax law inquiries.
2. Check your withholding. Use the IRS Withholding Calculator tool to check if you're on target with the amount withheld from your pay. This tool can help you decide if you need to give your employer a new Form W-4, Employee's Withholding Allowance Certificate.
3. Check your refund status. The Where's My Refund? tool is a fast and easy way to check the status of your tax refund. Use the IRS2Go mobile app or click on the "Refund" tab on IRS.gov.
4. Order a transcript. Order your tax return transcript or tax account transcript online. You'll receive it within 5 to 10 days.
5. Pay your taxes electronically. Use the Electronic Federal Tax Payment System to pay your taxes online or by phone. EFTPS is a free service.
6. Apply for a payment agreement. The Online Payment Agreement tool allows you to apply for a payment agreement online if you owe $50,000 or less in taxes, interest and penalties,
7. Check out a charity. Search for qualified charities using Exempt Organizations- Select Check. This tool will tell you if an organization is eligible to receive tax-deductible donations.
8. Check your homebuyer credit repayments. Use the First Time Homebuyer Credit Lookup tool to get account information such as the total amount of your credit or your repayment amount.
9. Get forms and publications. View, download and order federal tax forms and publications anytime, day or night.
10. Check your eligibility for an offer in compromise. An OIC allows you to settle your tax debt for less than the full amount you owe. It's an option if you can't fully pay your taxes, or doing so creates a financial hardship. Use the OIC Pre-Qualifier tool to see if you may be eligible before you apply for one.
11. Get up-to-date tax news. Get the latest tax information in the IRS Newsroom.
12. Explore career opportunities. Learn about careers at the IRS. The IRS is seeking students, recent college graduates and experienced professionals for full-time career and seasonal positions.
Renting Your Vacation Home
A vacation home can be a house, apartment, condominium, mobile home or boat. If you own a vacation home that you rent to others, you generally must report the rental income on your federal income tax return. But you may not have to report that income if the rental period is short. In most cases, you can deduct expenses of renting your property. Your deduction may be limited if you also use the home as a residence. Here are some tips from the IRS about this type of rental property:
* You usually report rental income and deductible rental expenses on Schedule E, Supplemental Income and Loss.¨You may also be subject to paying Net Investment Income Tax on your rental income.
* If you personally use your property and sometimes rent it to others, special rules apply. You must divide your expenses between the rental use and the personal use. The number of days used for each purpose determines how to divide your costs.Report deductible expenses for personal use on Schedule A, Itemized Deductions. These may include costs such as mortgage interest, property taxes and casualty losses.
* If the property is "used as a home," your rental expense deduction is limited. This means your deduction for rental expenses can't be more than the rent you received. For more about this rule, see Publication 527, Residential Rental Property (Including Rental of Vacation Homes).
* If the property is "used as a home" and you rent it out fewer than 15 days per year, you do not have to report the rental income.
Get Publication 527 for more details on this topic. It is available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).
WhoDIK.com Helps Connect Businesses
When it comes to social networking it seems as if there couldn't possibly be anything new. But local entrepreneur, and former Advertising Creative Director, Patrick Heaphy of West Nyack, has developed WhoDIK.com, derived from the age old question "Who Do I Know..., with his cofounder and wife Debra.
The goal of WhoDIK.com is to provide small businesses with a targeted and simplified way to reach and reward loyal customers not only for their business but also for referring them to friends and family. While at the same time offering consumers local deals from retailers and service providers they know and trust. The result combines social networking with the ever popular deal offerings that consumers have come to enjoy.
Heaphy developed the concept after spending 15 years as a web entrepreneur and marketing and advertising professional helping small businesses. He and his wife Debra spent two years developing the concept and the site, fine-tuning it with feedback from their own friends and family.
"For entrepreneurs it can be incredibly frustrating and time consuming to try to navigate the enormous number of online marketing tools available especially when they are usually juggling so many other aspects of running their business," states Heaphy. After hearing numerous nightmare stories of Groupon offers gone bad and confusing Google AdWords instructions, he felt that small local business owners needed their own easily understandable and usable tool to encourage referrals, offer deals and increase business. To date the site has passed the 1500 user number mark including 300+ businesses in Rockland, Orange, Westchester and Bergen counties. And with over 350% user growth in May alone, WhoDIK could have as many as 50,000 users by the end of the year.
WhoDIK.com is a FREE Facebook connected website that relies on the power of its individual members to recommend businesses to each other, to write referrals and encourage others to try their favorite retail shops, service providers and restaurants. It becomes a social network that is friend-to-friend and local. For example, someone looking for a plumber might call a friend but now they can also turn to WhoDIK.com and see what plumbers their friends recommend.WhoDIK.com users therefore have a personal connection to the person or company they are calling and they can quickly and easily see a visual connection chain of how they are connected to the business - think six degrees of separation. And all WhoDIK.com users benefit by receiving special friends-and-family treatment in the form of privileged offers and discounts.
"Referrals and reviews on larger sites can be fabricated in a good or bad way and are often from people you do not know. They can also be subject to the whims of the site presenting them; for example Yelp chooses to hide certain reviews but does not give a clear reason for it and some referral sites have fees attached for doing the search in the first place," states Heaphy. "Our goal was to eliminate these issues and keep it simple yet effective."
Business owners will appreciate the fast and simple advertising campaign tool that allows them to create and customize offers specifically for their connections. Users search and connect to participating businesses and receive referral discounts based on their genealogical and friendship connections established through the site. The site is also sophisticated enough to allow businesses to accurately target customers based on their interests.
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