Personal Finance

3 Special Tax Breaks for Members of the Military

Note that your state of legal residence should not be confused with your "home of record." Your state of legal residence is the state in which you are legally a resident and which you intend to make your permanent residence. You can change your state of legal residence at any time. Your home of record is the state in which you enlisted, and it cannot be changed. This is important, as certain military benefits are based on your home of record.

Residents of Alaska stationed elsewhere should note that military members stationed outside of Alaska must meet certain requirements to remain eligible for the annual Permanent Fund dividend. You can find these requirements on the fund's website.

A third tax benefit military members enjoy is that living allowances are not taxable. These include the Basic Allowance for Housing and the Basic Allowance for Subsistence, which, if you have dependents, can add up to a significant portion of your income.

Most military members move a lot. Uncle Sam permits civilians and soldiers alike to deduct some moving expenses, but he's a little more generous to the military. For example, in order to qualify for the moving expenses deduction, most folks need to be moving for a new job that's at least 50 miles farther away from their old home than their previous job was. That distance rule doesn't apply to military folks, though.

If you're an active-duty military person moving because of a permanent change of station order, you can deduct many of your unreimbursed moving expenses. (Note that you cannot deduct any expenses for which you were reimbursed -- that would be double-dipping!)

You'll need to use IRS Form 3903 to claim your moving expenses. The kinds of expenses that qualify include packing, crating, hauling, storing (while in transit), and insurance expenses. While your belongings are in transit, you may also deduct your own lodging and travel expenses -- but not meals. If your move involves traveling to a foreign country or between two foreign countries, then you may also be able to deduct longer-term storage costs and the expense of moving belongings into and out of storage.

Another tax break applies to National Guard members or Armed Forces reservists. When you're called to travel more than 100 miles and stay overnight, you can deduct the cost of work-related travel and lodging, as well as half of your meal expenses, so long as they're within limits -- and you can do this without itemizing your deductions, too. To learn about all of these breaks, look into the IRS rules more closely or consult a tax pro to be sure you follow all the rules.

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The article 3 Special Tax Breaks for Members of the Military originally appeared on

Dan Caplinger has no position in any stocks mentioned. Dan Dzombak has no position in any stocks mentioned. Selena Maranjian has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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