How to Prepare Your Taxes
Filing taxes is a responsibility for all eligible taxpayers, and your service member is no exception. Now, every civilian knows doing taxes is hard, but how about military taxpayers? Well, in many ways, one could say filing taxes as a member of the military is more complicated.
Service members generally face unique challenges when filing their taxes. From deployment-related tax rules to special exemptions that need to be taken into account when filing their returns, filing taxes in the military is a whole different beast from doing it as a civilian.
Thankfully, there are various resources and systems designed to help cater to the specific needs of military taxpayers. Taking advantage of these resources and the many other tax benefits is essential for service members to maximize their tax savings and ensure compliance with IRS regulations. In this article, we will share with you all you need to help your service member prepare their taxes.
Gathering the Right Documents
Filing your taxes starts with having all the right documents. For service members, the following documents are essential:
The Wage and Tax Statement, W-2 form for short, is a form that shows the total amount a taxpayer earned over the year and how much of their earnings is expected to be used on federal, state, and other taxes. This is one of the most important tax documents.
An important IRS form used to report payments that might be eligible for tax deduction, there are various versions of this form that your service members may encounter. The most common of these are:
Form 1098-T – A Tuition Statement issued by colleges and universities that shows how much was paid in qualified tuition and related expenses. This form is used to determine eligibility for education tax credits like the American Opportunity Credit or Lifetime Learning Credit.
Form 1098-E – A Student Loan Interest Statement that reports the amount of interest paid on student loans during the year, which can help deduct up to $2,500 in interest, even without itemizing their deductions.
Form 1098 (Mortgage Interest Statement) – For those who own a home, this version reports mortgage interest paid, which may be tax-deductible if itemized.
The LES is a monthly statement provided to service members that outlines their pay, entitlements, deductions, and leave information, offering a detailed breakdown of their monthly earnings. It includes both taxable and non-taxable income, as well as allowances such as housing, subsistence, and family separation pay. This document is essential for service members to review regularly to ensure their pay is accurate and to manage their finances effectively. It also helps them track their leave balances and verify deductions for things like insurance premiums, taxes, and retirement contributions.
Conclusion
Filing taxes as a service member can be more complex than for civilians due to unique military-related rules, exemptions, and benefits. However, by gathering the right documents, such as W-2 forms, Form 1098s, and the Leave and Earnings Statement (LES), service members can ensure that they are properly preparing their taxes.
