1)Student first response

In the IRS publication 3 there is a variety of things covered on top of the armed forces tax guide. One of the extra things covered is the ability for an individual to pull from their IRA without being subject to the 10% tax and have a three-year repayment window. The IRS has also started to accept electronic amendments from armed forces personnel in the form of the 1040-x. It also covers basics for deductions associated with miles traveled to include moving and medical.

                This publication annotates what kind of pays are excluded from thier gross income. This is helpful for many reasons as I personally have had years where my W-2 comes back with zero income for the years since I was in a combat zone for the entire period. It also states that service members who are using basic allowance for housing (BAH), which is not counted for gross income, can still claim the interest paid on a mortgage. For combat zone personnel the limit they can contribute to their TSP is adjusted to $57,000.

                For many service members overseas picking up a part time job may be viable depending on their work schedule. This publication covers the basic tax requirements for the service member if they are receiving a check from a foreign source. Military members can wave these taxes up to $107,600 if they have a tax home overseas or are serving in a designated combat zone.

                Moving is inevitable in the armed forces and although they do a lot to compensate you for that many still end up paying out of packet at some point. This publication covers if some of those items and allowances are counted as income or deductibles. For example, a service member can deduct the cost associated with moving their household good to include the price of the trailer. They can not however deducted household good bought along the way. This can also include the standard 17 cents per mile deduction and gas and oil.

References

Publication 3 (2020), Armed Forces’ tax guide. (2021, February 12). Internal Revenue Service | An official website of the United States government. https://www.irs.gov/publications/p3

2)Student first response

This week we are covering more information regarding property taxes. Somewhat in relation to this I would like to discuss a tax benefit I recently found out about which benefits my family and may benefit some of your families as well since many of us are military affiliated.

In the state of North Carolina there is a tax benefit called disabled veteran property tax homestead exclusion. This stipulates that a property owner that is a veteran of the US armed forces with an honorable discharge and meets one of three criteria that deem the individual 100% disabled as defined by the Department of Veterans Affairs is entitled to a $45,000 deduction on the assessed real property value. One question that came to mind for us is whether this was compoundable as we are both permanently disabled according to the VA, which it is not. 

Some other states have full property tax exemption if you meet certain disability requirements a veteran and these states are Florida, Hawaii, Maryland, Arkansas, Michigan, New Hampshire, New Jersey, New Mexico, Oklahoma, and Texas. Additionally, most other states have some sort of benefit related to home ownership and you can read that criteria for your own state from the link below. 

Example of how my taxes due changes based on this information:

Assessed home value = $300,000 // (45,000) $255,000

County Tax Rate = 0.770% // 0.770%

Property Taxes = $2,310 // $1,964

Amount Saved on this deduction = $346

NC Guidance: Department of Military and Veteran Affairs. (2021). Veterans Property Tax Relief. Retrieved from: Veterans Property Tax Relief | DMVA (nc.gov) 

All Other State Guidance: Military Benefits. (2021). Disabled Veterans Property Tax Exemptions by State. Retrieved from: Disabled Veterans Property Tax Exemptions by State (militarybenefits.info) 

NC Tax Code Reference: North Carolina General Assembly. (2010). ¶105-277.1C. Disabled Veteran Property Tax Homestead Exclusion. North Carolina General Statutes. Retrieved from: GS_105-277.1C.pdf (ncleg.gov)

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