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In the Military? 6 Tax Benefits to Keep in Mind

Maurie Backman, The Motley Fool

Being a military member takes dedication and sacrifice. As a thank you, the IRS offers certain tax breaks that aren't available to civilians. If you're in the military, here are a few you should know about.

1. You get more time to file your taxes

Military members who serve in a combat zone get extra time to prepare their taxes without having to worry about penalties in the interim. Depending on your circumstances, you get a 60- to 180-day extension provided you notify the IRS of such.

2. You can exclude some types of pay from your income

Regular workers must report all of the income they earn to the IRS. But if you're a military member who received pay for serving in a combat zone, that income is generally excluded from taxes. That includes pay you may have received while hospitalized as a result of having served in a combat zone.

Man in fatigues with arms crossed

IMAGE SOURCE: GETTY IMAGES.

3. You can deduct travel expenses for service purposes

If you're a military reservist and travel more than 100 miles from home in conjunction with your service, you can deduct that expense as an adjustment to income. That means you can snag this tax break even if you don't itemize on your tax return.

4. Your survivors won't pay taxes on your death benefits

If the unthinkable happens and you're killed during your time of service, you can rest assured that not only will your survivors receive a death benefit, but they won't pay taxes on that sum. Survivors of armed forces members are entitled to a $100,000 payment from the government in such a scenario, so the associated tax savings are actually quite substantial.

5. Your tax liability will be forgiven if you die in the line of duty

If you owe the IRS taxes but die while on duty in a combat zone, or in support of a combat operation, the IRS will wipe your slate clean and not come after your survivors for that unpaid sum. It's the least the agency can do.

6. You're entitled to free tax help

When busy defending your country, you may not have time to sit down and research new tax laws or navigate the complex beast that is our tax code. The good news, however, is that military members have a number of tax-help resources available to them. Many tax preparation companies offer free filing services and software to military members. You can also seek help from the Volunteer Income Tax Assistance program. Those who work for this group are trained and equipped to deal with military-specific tax issues.

In addition to these important tax benefits, it pays to explore the various credits and deductions you may be entitled to just as civilians are. For example, if you have children under the age of 17, the newly expanded Child Tax Credit might pay you up to $2,000 for each one. And if you're a lower earner, you may be eligible for the Earned Income Tax Credit. Be sure to snag whatever tax breaks you're able to claim this year -- for serving your country, you deserve it.

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