Nobody likes tax season. Nobody. No. Body. But, that doesn’t make it any less inevitable. After all, they are necessary to keep our government running. Remember: those of us who served in uniform could never have gotten paid for our time if it weren’t for people paying their taxes. Even if you actively served at some point, you still had to pay active duty taxes. And the reality is no different for those who completed their service, either as veterans or retirees. You gotta pay your taxes. And we’ll run you through exactly how to do it.
Taxes for Veterans
For those who fall under the fairly broad category of military veterans, taxes are taxes. Which is to say, whatever taxes a civilian in your position would pay on their income, property, investments, and the like. But that’s just when it comes to normal taxes on normal sources of monetary gain. As a veteran, you have extra resources and options to consider come tax season.
IRS Tax Services for Veterans
For all the guff folks give the Internal Revenue Service for simply doing their job, they try their best to do right by veterans. And the IRS information for veterans page has some great info and links to help get your taxes done right. Here’s a quick overview of your possible options:
- VITA – The same Volunteer Income Tax Assistance program that you may have used while serving is available to anyone earning less than $56,000 a year. It’s a free and easy way to get professional help getting your taxes sorted out and filed properly either in person or online. If you qualify, you should definitely use them.
- TCE – Tax Counseling for the Elderly is similar to VITA, insomuch as it provides free tax services to those who qualify. But, as its name implies, it’s for anyone 60 or older. Their personnel have special expertise on tax issues related to things like retirement and pensions.
- IRS Free File – Every American has the ability to download the necessary forms and file their taxes for free. And those making under $69,000 a year can download free tax filing software to make the process super easy.
Other Tax Services for Veterans
Maybe you prefer to go outside the IRS to get your taxes organized and filed. Or maybe don’t qualify for the above programs. Or you don’t want to go through the laborious process of downloading and directly filling out all those complicated tax filing forms. Many companies and banks offer free tax services for individuals who qualify.
- MyFreeTaxes – A program run by the United Way, MyFreeTaxes offers free online tax filing for anyone making less than $62,000 a year.
- TurboTax Freedom Edition – You qualify for this free version of TurboTax if you earn an income below $36,000. Individuals eligible for an Earned Income Tax Credit (EITC) can get it as well.
- H&R Block’s Free File – if you qualify for IRS Free File software (meaning you make under $69,000), H&R Block has an online system to walk you through it for no extra charge
- Online Taxes (OLT) – Just like H&R Block, OLT will walk you through IRS Free File software if you qualify.
Taxes for Disabled Veterans
If all this talk of taxes is getting you a little down, good news. Your disability payments are completely tax free. Whether you’re rated by the VA at 100% disabled or you just get that near-universal 10% for tinnitus, your monthly disability payments are completely exempt from all state and federal taxes. So you can breathe easy there.
GI Bill Taxes
More good news: all your GI Bill benefits, like disability benefits, are also non-taxable. So if you were worried about owing a lot on your tuition coverage for those in-school BAH payments, there’s’ no need. This also applies if you’ve transferred your GI Bill to a family member, so your spouse or dependent doesn’t have to worry about it either.
Taxes for Retired Military
Military retirees qualify for all the exemptions and programs we listed above (so long as they fulfill the specific qualifications, like age or maximum income, that go with each one). And your benefits, like disability pay and the GI Bill, are also tax exempt.
Your military pension, however, does qualify as income. That means your retirement pay is subject to federal taxes. On the upside, as someone who still legally counts as a member of the military (rather than a veteran), you are eligible to utilize Military OneSource’s free MilTax program to file. So while you still have to pay, the process can stay fairly easy without incurring additional costs.
States that Tax Military Retirement
We’ll tell it to you straight: There are currently only six states that do not exempt military retirement pay from state taxes.
- New Mexico
- North Dakota
- Rhode Island
Every other state either taxes you solely on your non-pension income or has no income tax at all. Either way, those 44 other states do not tax your military retirement pay.
These extra tax breaks, options, and services are among the many benefits you earned with your selfless service in uniform. Whether it was for four years or four decades, your time in the military has its rewards. Know the choices you have this tax season to pay what you owe and not a penny more.