Defense Department Offers Tax Preparation Help

By Samantha L. Quigley
American Forces Press Service

Feb. 6, 2009 - With April 15 looming, the Defense Department is on call to take the sting out of tax return preparation for servicemembers. "Each of the legal offices provides some form of tax preparation assistance," Air Force Lt. Col. Don Svendsen, executive director for the Armed Forces Tax Council, said. "People that are doing the return preparation have been trained [and] certified by the [Internal Revenue Service].

"Usually we can prepare the return right there on the spot," he added.

To make sure that a return can be finished in one visit to a tax center, Svendsen suggests making sure to bring certain documents to the appointment.

"For starters, we need them to bring their Social Security cards," he said, adding that all family members' cards need to be present to ensure accuracy. "They need their W-2s, and they need any other documents that are going to be tax related that they may have gotten in the mail.

"There is nothing more frustrating to the member than to visit the tax center and then realize he or she forgot a document," he said.

To keep those occurrences to a minimum, the tax centers on military installations have packets to help servicemembers get organized and think through what they need to bring with them, Svendsen said.

As fast and easy as the tax centers aim to make the process, situations arise that can make filing a tax return difficult. Deployments, for instance, don't always happen conveniently with the normal tax-filing season, Svendsen said.

Congress, however, has authorized a filing extension for troops serving in a combat zone. It also has granted troops a certain amount of time after leaving the combat zone in which to square away any tax issues.

"Fortunately, Congress has given us an extension. When you go ... into that combat zone, the clock stops for tax purposes," Svendsen said. "Let's say a member enters a combat zone on the 14th of April, one day before the tax-filing deadline. They're down there for an entire year [and] ... come back out the following April 14.

"They get a minimum of 180 days to file the earlier tax return, plus they get 180 days, probably more, for the current tax return," he added.

The stop on the tax clock also can apply to IRA contributions for servicemembers and spouses, Svendsen said.

And, all pay for noncommissioned officers – and much of the pay for officers -- while serving in a combat zone in 2008 is tax-free, he said.

"If the member is an enlisted member, all pay is going to be tax-free," Svendsen said. "In this case, all really does mean all. If a member is in the combat zone, and they re-enlist and receive a re-enlistment bonus, the entire amount of the bonus is going to be tax-free."

For officers serving in a combat zone, pay up to the maximum enlisted amount will be tax-free, he added.

However, service in a combat zone can affect a servicemembers' ability to claim the Earned Income Credit. The tax credit is for low- to moderate-income working people and families. Recent changes continue to make this credit a possibility for servicemembers who have served in a combat zone, Svendsen said.

Those tax changes and others of interest to military members may be found in IRS Publication 3, "Armed Forces' Tax Guide," available on the IRS Web site, www.irs.gov.

Military tax center volunteers can help answer any questions about those changes, including a first-time homebuyer credit and economic stimulus checks, Svendsen said.

For those servicemembers who want to prepare their own tax returns, MilitaryOneSource.com provides online tax return software.