IRS Spotlights Income Tax Compliance for U.S. Service Members and Veterans

Earlier this month, the Internal Revenue Service (IRS) published a Tax Tip focused specifically on income tax compliance for U.S. service members and veterans. The Tax Tip includes a list of resources that are specific to current and former members of the military and notes that “[r]eviewing these resources is a good way [for service members and veterans] to prepare for the upcoming tax filing season.”

Active service members are eligible for certain benefits that are not available to civilian taxpayers. Additionally, both active service members and veterans can qualify for various forms of tax assistance and tax relief through the IRS. By taking advantage of these benefits—and seeking help when necessary—current and former members of the military can minimize their federal income tax liability while mitigating their risk of facing an IRS audit.

Highlights from the IRS’ Recent Tax Tip for U.S. Service Members and Veterans

So, what do current and former members of the military need to know when preparing their tax returns for the 2022 tax year? Here are some of the highlights from the IRS’ recent Tax Tip:

• Service members and veterans may be eligible for various tax breaks, credits and exclusions. This includes the income tax exclusion for those who have served in a combat zone as well as the special earned income tax credit (EITC) for service members and veterans. Service members and veterans may qualify for tax breaks related to the sale of their principal residence, overnight travel for reserve duty, military academy attendance, and military spouse business ownership as well.
• Service members and veterans can use MilTax to get free tax return preparation assistance—with caveats. MilTax is a service that is available exclusively to current and former members of the military and their families. Through MilTax, eligible individuals can get free tax return preparation assistance and file their federal income taxes online. It should be noted, however, that no online tax preparation service is a substitute for personalized tax advice, and relying on MilTax does not excuse the underreporting or underpayment of federal income tax liability.
• Active-duty service members must be careful to ensure federal tax compliance. As the IRS notes, “[a]lmost half of the unpaid taxes owed by current and retired federal employees are owed by retired military.” To avoid liability for unpaid taxes, interest and penalties, service members must be careful to ensure that they accurately calculate their taxable income and pay what they owe on time.
• Current and former members of the military can use the Armed Forces’ Tax Guide to understand their tax obligations. The Armed Forces’ Tax Guide provides an overview of many of the tax-related considerations that are unique to service members and veterans. If you have questions, this can be a good place to start, but you should not hesitate to seek personalized tax advice if necessary.

Contact Tax Attorney Kevin E. Thorn, Managing Partner of Thorn Law Group in Virginia

If you are a current or former member of the military and you have questions or concerns about what you owe the IRS, we encourage you to contact us for more information. To schedule a confidential consultation with tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, please call 703-752-3752, email ket@thornlawgroup.com or tell us how we can reach you online today.