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Military tax breaks are available

National Military Appreciation Month trivia question: How many military tax benefits can you name?

Here's an overview of three.

  • Home of record. For your 2009 tax return, if you're the spouse of a military service member, you may be able to keep your home state for tax filing purposes no matter where your family is posted.

    When you relocate in order to be with your spouse, the Military Spouses Residency Relief Act makes it easier to maintain permanent residency in your home state, potentially reducing your tax bill and easing filing complexity.
  • Homebuyer credit. You have an extra year to qualify for the homebuyer credit if you or your spouse served on qualified extended duty outside the U.S. between December 31, 2008, and May 1, 2010. Meet the conditions and you can claim the credit - up to $8,000 as a first-time homebuyer or $6,500 as a long-term resident - when you buy a home by April 30, 2011.

    In addition, if you sell your home within three years, you may be able to avoid a recapture of the credit if government orders changed your duty station.
  • Differential pay. Did you get differential pay from your civilian employer during 2009? You might have noticed a change in the way that pay is reported to you. The reason: Money you receive from your employer to help fill the gap between your regular salary and your military pay is now considered wages and is included on Form W-2.

    Differential pay is subject to federal income tax withholding, but not social security or Medicare tax, and is included in compensation for retirement plan calculations.

Give us a call to discuss other benefits available to you as a member of our uniformed services. We're here to help with all your tax and financial decisions.

For more information, contact Ross Rizzo at 212-404-5528, rrizzo@sb-cpa.com.

"Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.

The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.

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