Posted on Dec 30, 2013
What 2013 tax tips could you help provide our brothers and sisters in arms?
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<p>I have been in the service for quite a while. During tax season I have used HR Block, the US Army's tax assistance, and a few other services to complete and file my taxes. A few years ago I hired a personal accountant to help me out. My accountant showed me so many things I did not know about filing my taxes that she was able to recover thousands more for me than any other tax prep organization. I thought I would share a few and see if others out there could provide more as well. </p><p> </p><p>First, I completed a DITY move (conus to conus) and before I claimed my gas and toll reciepts through travel my accountant suggested I file them on my taxes and not through travel. She explained that if I claim them through travel my refund would be taxed at 28%. If I claim them on my taxes and did not exceed my yearly exemptions I would get all of it back. Since I own a house and itemize my taxes she was correect. I earned an additional $440. You can only claim them at travel OR on your taxes. If you do both you will be audited and possibly fined. </p><p> </p><p>Second, I cut my own hair. I save a lot on hair cut costs and I do not have to tip myself. That alone is a great savings but my clippers for that year busted and I bought a new pair. My accountant took the recipts for the clippers, the dissinfectant spray, and clipper oil and deducted them from my yearly excemptions because of the professional appearance requirement of our job. I never thought of that before she advised me of it. </p><p> </p><p>There are many more I can think of but I am sure many of you have great ideas as well. Please share them with us.</p>
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I've used turbo tax every single year and find it to be a great source of information. It basically holds your hand through every possible scenario.
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WO1 (Join to see)
Exactly, I don't see myself randomly running into magic money with loopholes any time soon.
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SGM Wagenbrenner,
You actually aren't "taxed" at 28% on DITY moves, you have a withholding tax (estimate) of 28%. It's just an estimate that the government uses. Just like your monthly taxes that are taking out, it is just a witholding tax (estimate), your "tax" is actually only figured out when you file at the end of the year.
When you file your taxes, your income is taxed at your actual bracket rate based on your income and has nothing to do with how much witholding or estimated taxes were withheld during the year.
So, whether you choose to use your gas receipts against the DITY claim or on your taxes at the end of the year, the actual tax liability actually ends up being the same because the gas receipts are deductions to your income whether you claim them at the point of the DITY move or at the end of the year.
The only difference is that if you don't use your gas receipts on your DITY claim, you're withholding will be more and you will in essence be giving the government an interest free loan of the money it owes you.
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CSM (Join to see)
Roger, CSM. The 28%
is the standard holding. By using the
exemptions and tax credits I had accumulated that year I was able to file those
receipts with full reimbursements. You are correct that you need to items to beat
the standard deduction of the 1040EZ form.
Thanks
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CSM Mike Maynard
But whether you deducted the gas/tolls against the DITY Income with the military or on your taxes at the end of the year, it's still the same amount of money deducted and therefore affects your total income and taxes exactly the same.
By not claiming the deduction up front on the DITY, they took 28% of your gas/tolls in withholding until the end of the year instead of you getting to keep it until the end of the year.
Let's say your DITY income was $2,000 and your gas receipts were $1,000. If you claim the receipts against your DITY move, the gov't would only withhold 28% of $1,000. If you wait until the end of the year to use the gas receipt deduction, they would take 28% of $2,000. So you're letting the government hold on to that extra money for free until the end of the year when you settle up.
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Talking to an accountant is a great idea.<div><br></div><div>- Unless you own a home, you probably won't have more than the "Standard Deduction", so you won't be able to claim all the military related deductions (haircuts, cleaners, associations, etc).</div><div><br></div><div>- TSP is a great way to shelter income. For every dollar you put into a regular TSP, it is deducted from your income. If you are in a 10% tax bracket, you "make" 10% on your money (through tax avoidance) in addition to what TSP actually gains.</div><div><br></div><div>- If you get a large refund (some aren't disciplined enough to save and use tax withholding as a forced savings account), increase your exemptions so that you get more of your money back each month instead of at the end of the year. In fact, you can actually owe up to $1,000 in taxes at the end of the year without penalty. It's the same as a $1,000 interest free loan from the government.</div><div><br></div><div>- To maximize your retirement savings, utilize the TSP along with an IRA - you can contribute a maximum of $23,000.</div><div><br></div><div>- Understand the difference between Roth and Tradition for both your TSP and IRA. For some folks Roth is better and for others a Traditional is better. It all depends on your anticipated tax bracket when you start pulling money out.</div><div><br></div><div><br></div><div><br></div><div><br></div>
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CSM (Join to see)
As for a tax shelter we have ROTH IRAs for both my wife and I. This allows us to put double away each year (if we maximize to investment yearly). I would also suggest that opening certain college funds for your children with also provide a good shelter. I have three opened through USAA for my boys. They can be great ways to shelter some money as well as provide for the future of the next generation.
I would suggest to anyone to use a certified account for your yearly taxes. Each year tax laws are rewritten. Additionally, each year a new military tax book is published. I am only speaking of federal taxes but each state does the same. With the use of my accountant she was able to go back 3 years and find me a great deal of additional funds I had missed because I did not understand the changes and allowances of that current tax year. Accountants (at least the good ones) recieve yearly seminars on the new laws and changes. It would be worth the time for many of our Soldiers to look into a personal accountant.
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CSM Mike Maynard
Great advice SGM, since you mention the state thing. It may be a good thing to switch your residence if you become stationed in one of those states that are more favorable to out-of-state military. That has saved me a lot of money.
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