The tax deadline for service people is three months away and all of the buzz about debt ceilings might have you worried. Rest assured, there are still a few good men in Washington looking out for the economic rights of military members. One of the more significant bills that’s still generating buzz is the Disabled Veterans Tax Termination Act.
The Disabled Veterans Tax Termination Act is a bill introduced by Georgia congressman Sanford Bishop in January of 2009. The bill is largely seen as bipartisan; in fact, The Military Officers Association of America, the Disabled American Veterans, and the Military Order of the Purple Heart among others all support the bill and its lobbying efforts. How would this bill, if passed, affect the country’s disabled vets fiscally?
Not only would veterans with a service-connected disability rating lower than 50% receive disability compensation, they’d then be able to receive retired pay. Additionally, the bill would tear down the roadblock that prevents physically disabled members of the armed forces that served fewer than 20 years to retired pay and VA compensation.
Until the DVTTA has its day in Washington, disabled veterans and other military personnel should fully investigate their options as taxpayers. What credits and perks are available to you specifically?
Free Tax Prep. Filing taxes can get quite complicated for those in the service and their families. Filing taxes comes for free for most, but assistance from someone who knows what they’re doing can cost you. Fortunately, there are several places that discount this price. TurboTax, through its Intuit Tax Freedom Project, offers it for free.
Military Spouses Residency Relief Act. The husbands and wives of service people were previously required to officially change their residency to whichever state their spouse was relocated to because of a permanent change of station. Which may not sound like such a big deal until you consider state tax laws and voting, among other issues.
Early IRA Withdrawals. The penalties of taking your retirement savings (401k or IRA) before you’re supposed to can shrink your savings pitifully. However, if you were called to active duty for more than 179 days, were called after 9/11 and withdraw funds while on active duty, no penalties will be counted against you. That said, you should investigate your options thoroughly before withdrawing from your retirement accounts as it could make retirement planning more difficult in the future.
State Tax Relief. Everyone knows that tax laws and credits vary state-to-state; while some states have no income tax for civilian residents, others charge sky-high property taxes, and each state has different benefits pertaining to military personnel and veterans. For instance, Virginia significantly reduces its property tax levied on severely disabled veterans. The link above lists benefits for veterans including tax benefits, loans, and other areas.