After you retire from the military, filing taxes may seem less complicated than when you were still in service, but veterans can still benefit significantly from the tax code.
To help you with your 2020 tax returns, we have provided this helpful information, especially for veterans. Remember to file your taxes by April 15 this year.
Federal taxes
You will owe federal income tax on military pension payments. However, if you participate in the survivor's benefit plan, which supports your beneficiaries after your death, your dividends are omitted from your taxable income. Also, military pension payments are not considered earned income for calculating Social Security taxes, and no SS payroll tax should be withheld from this payment.
Veterans education benefit payments received by the Department of Veterans Affairs (VA) for education and training are tax-free.
Payments for VA disability benefits are not taxable. These include disability and pension benefits, disability benefits for modification of homes or vehicles (such as wheelchair ramps), and benefits from dependent care assistance programs.
Note: If you've recently had an increase in your disability rating or received special combat-related compensation, you may be qualified for a tax refund. However, this can only be applied in the year in which the VA reassessed the level of disability, and it may be necessary to file an amended return.
Other non-taxable VA money:
Any bonus paid by a state, county, town, or city for serving in a combat zone.
Benefits under a dependent-care assistance program
Interest from VA life insurance policies
Money paid to a survivor of a military veteran who died after September 10, 2001
Payments made under the compensated work therapy program
Missing money from stimulus checks can still be earned through the Internal Revenue Service (IRS).
The IRS used information from the Veterans Administration to issue incentive payments. Therefore, if you received a down payment based on the information they have for 2019, you may be eligible to receive more in the form of a recovery rebate credit when you file your 2020 taxes.
Even if you don't owe or pay taxes in 2020, you may still be eligible for the first and second stimulus payments and any payments for eligible dependent children. However, you would not be eligible for an incentive check if your Adjusted Gross Income (AGI) is greater than:
$136,500 for the head of household
$198,000 if your filing status is married and filing jointly
$99,000 if your filing status is single or married filing separately
However, because the second stimulus's value was less than the limit for the first round, people who earned more than $ 87,000 and couples who together earned more than $ 174,000 would not receive a second check.
If you are eligible, you will need to file the standard federal income tax Form 1040 or Form 1040-SR for people aged 65 and above to get the missing stimulus money, which will reduce the amount of the tax return due or increase the size of your refund.
State taxes
Some facts about state taxes:
Benefits are often transferred to an honorable discharged veteran or surviving spouse of veterans.
Each state's income website describes state benefits for veterans and how to apply.
Many states include additional benefits for veterans with disabilities.
State benefits typically include some form of value-based property tax exemption.
States generally grant tax benefits only to veterans who have been honorably discharged or discharged from active service in honorable circumstances.
Disabled veterans are eligible for property tax exemptions. These breaks, which are usually associated with a specific disability classification, can save veterans thousands of dollars. However, since tax laws change frequently, it is best to check the tax structure with your state tax office or tax professionals.
Military pension payments may be tax-exempt or may have other "special arrangements" in some states. If you are eligible, check your tax laws with your local tax assistance center, state finance office, or tax professional, such as FLYNN FINANCIAL GROUP, INC..
FOR MORE INFORMATION OR TO SEE HOW FLYNN FINANCIAL GROUP, INC. CAN BEST HELP YOU WITH YOUR TAX FILING NEEDS, PLEASE CLICK THE BLUE TAB ON THIS PAGE.
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