Military Families have Special Tax Breaks – but the rules can be tricky, experts say

Under the Servicemembers Civil Relief ActState Income Tax is based on your “State of Legal Residence” during Active Duty, Regardless of where you’re stationed. If eligible, it’s passible to keep that residency Through your Military Career.

“Military members tend to have residency in states without an income tax,” Such as Florida, Texas or Washington, Said CFP Curtis Sheldon, Who is also an enrolled agent at Cl Sheldon and Company in Company Alexandria, va. The Firm Specializes in Working With Active and Retired Military Members.

Another Unique Benefit for Service Members is Tax-Exempt “allowels“Sheldon said.

Generally, pay is taxable, whereas most allowances-Such as Funds for Housing and Food-Are Tax-Exmpt, He explained.

“They do’t get reported anywhere on the tax return,” and these items do’t show up on Form w-2He said. “It’s somenting you have to keep track of yourself.”

When Selling a primary residence, many homeows can exclude a portion of profits From Capital Gains Taxes.

Generally, The Limit is $ 250,000 for Single Filers or $ 500,000 for Married Couples Filing Jointly. But you must meet the “use test” by living in the home for two for the last five years before the sala.

That Rule is suspended For Members of the Armed Forces, Sheldon Said: “You get to stop the clock.”

That means it’s stiffers to qualify for the tax break, even without meeting the two-yar use test, if you live elsewhere while on “Qualified official extended duties,” Acording to the ors.