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Tax Tips for Veterans

Tax return

With tax season right around the corner, it’s time to prepare! You may be wondering what documents you need, how you can file your return, and what kind of refund you can expect.

As a military member or a veteran, you may run into more complicated aspects of tax filing since you must handle elements such as disability payments, combat pay, multi-state filing, and deployment.

How Can Veterans Prepare to File Taxes?

To get started with your tax preparation, you’ll want to make sure that you have all the right documents.

What Tax Documents Should I Collect?

If you are filing through a service, you will want to check with them to see what documents and records they require you to have. To get started, we recommend gathering:

  • Earning statements- forms W-2, 1099-R, W-2G.
  • Childcare costs
  • Last year’s tax return
  • Investment income forms
  • Charitable donation receipts
  • Receipts for expenses that can be written off
  • Military ID or Photo ID
  • Bank account number and routing number for direct deposit of your refund.
  • Social security numbers for all family members who are claimed

You can check out the IRS website for a full list of documents to bring.

What Deductions Do Veterans Qualify For?

Combat Injured Veterans

According to federal law, veterans who have suffered combat-related injuries and are separated from the military should not be taxed on their one-time lump-sum disability severance payment from the DOD. Under federal law, you may be eligible for a refund. If your disability rating has increased, you may be eligible for other exemptions.

VA Disability Benefits

Any disability payments or benefits you have received from the VA should not be considered in your gross income. This includes grants for accessibility updates to your vehicle and home and some dependent care assistance.

VA Payments

If you have received payment from the VA, it is important to keep in mind that the following are exempt from federal taxes:

  • VA disability payments and education benefit payments
  • VA life insurance policy interest
  • Money that was paid to a survivor of a member of the armed forces who passed away after September 10th, 2001
  • Benefits provided under a dependent-care assistance program
  • Bonus pay from a state, county, city, or town for service in a combat zone

Free Tax Filing Resources for Veterans

The U.S. Department of Veterans Affairs (VA) and the Internal Revenue Service (IRS) entered into a Memorandum of Understanding back in 2015, ensuring that military members and veterans receive free tax preparation and filing services. You can access these resources online and in person.

AARP Foundation Tax-Aide Program for Veterans

The AARP Foundation Tax-Aide Program provides veterans with a range of tax preparation assistance models that are designed to help veterans and those in the military and others. Options include:

  • Safe, in-person services
  • Virtual assistance
  • Hybrid options with in-person and virtual services

While Tax-Aide is geared toward those who are 50 and older or those with low to moderate incomes, it is also open to anyone who wishes to use it free of charge. You do not need an AARP member to use these services.

IRS FreeFile

For those who earn $66,000 or less, you are eligible to use free name-brand filing software. Those who earn more can use the free file fillable forms.

Military OneSource MilTax

This program is offered by the Department of Defense. It is e-filing software that directs you through a series of questions that will help you complete your tax return. This software offers a unique understanding of military life with prompts for deployment, multi-state filing, and combat pay.

Learn More About Our Mission to Help Veterans

At Veterans Place of Washington Boulevard, we provide veterans in the Pittsburgh region with various life-sustaining programs, including education and employment assistance, transitional housing, food, clothing, and more, with our main goal being to end veteran homelessness.

To donate to our mission, visit our Donate page, or contact us today to learn more about our services. For other resources, such as building your credit, visit our blog to read more.

Rob Hamilton

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