September 6, 2022
Serving your country? You could be eligible for these tax benefits.
Serving in the military is a career choice that comes with a great deal of personal sacrifice. However, the U.S. government also offers service members certain benefits. In today’s post, we discuss some of the tax benefits specifically designated for members of the military:
Reduced interest on debt
As a service member, if you owe any money to the IRS, any interest over 6% is automatically forgiven. This benefit applies to other types of debt too – including a loan or credit card debt.
Most people incur significant penalties for withdrawing from their retirement account early. However, if you are in the military reserves, you may be exempt from such penalties if:
- You were on active duty for at least 180 days
- This service began after September 11, 2001
- Your retirement plan withdrawal occurred during your service
Travel and moving deductions
Military service often requires service members to relocate or travel for work. If you get restationed and have to move, you can deduct your moving expenses on your tax return. In addition, if you have to travel more than 100 miles for work, you can deduct return trip expenses that are not already covered by the military.
Death in combat erases tax debt
For most people, tax debt follows them after they pass away. Any outstanding debt will be carried over to the deceased’s estate – and the IRS can recoup any money they are owed by issuing a levy or lien on the deceased’s property. This can result in hardship for the deceased’s family. However, if a service member passes away while involved in a combat-related mission, any tax debt is forgiven.
Your service in the military deserves to be rewarded wherever possible. It’s worth understanding all of the ways that your career path can benefit your bottom line come to Tax Day.