Tax season is here and that means many of us are gathering papers, documents, and pretending we understand legal tax code and regulations in order to file our taxes quickly and appropriately. Reports have come out saying that this tax season maybe people are experiencing reduced refunds or even end up paying the IRS when they have never done so before, creating additional stressor for families.
In a study conducted by H&R Block, 42% of moms feel overwhelmed during tax season. The study also found that:
- One-third (33%) of moms surveyed would rather watch their child’s favorite show on repeat for a week if it meant not having to prepare their tax return
- 34% of moms consider potentially owing money on their tax return as the largest source of anxiety
- 24% of moms find that gathering the necessary documents was the largest source of anxiety.
Military families often have additional stressors to deal with when it comes to tax preparation season. There are several factors that can make filing your taxes as a military families more complicated including:
- Deployed service members: You must have power of attorney to file married, jointly. You also have to be sure that taxes are filed properly if you have tax-free pay or additional pay like combat pay or hazardous duty pay
- Military spouse careers: If you work in two (or more) different states, you may have to pay state income tax depending on your residency and the laws within your state of residency. However, a recent bill was passed stating that military spouses can claim the same state of residency as their spouse when it comes to income tax. But many states have not acknowledged this bill, and some states may come back years later stating you owe income tax because you were stationed there. Read more about the Military Spouse Residency Relief Act to see how you might be impacted.
- PCS taxes: Did you know that if you do a DITY and have additional income from your move, that that money is taxed?
- Buying/Selling/Renting Homes: Another big source of headache for military families is the buying, selling, and renting of your home. These gains and losses can have a significant impact on your taxes and you may have several investment properties to handle, making your tax filing much more complicated.
Lynn Ebel is the manager at the Tax Institute for H&R Block. The Tax Institute, H&R Block’s center of tax expertise, studies tax law changes so H&R Block can support its network of tax professionals, online tax preparation products and other tax prep services. Lynn specializes in real estate tax issues, including property transfers, passive activity losses, and bankruptcy issues. She has answered some common questions from Daily Mom Military readers regarding filing taxes as well as some advice on filing taxes for busy moms and military families:
H&R Block is available on many military installations to provide free or low cost tax filing to military families. But ultimately, the stress is still there- we still have to manage our finances, figure out how to best handle our filings during tax season, and consider all the unique factors that military life throws at us during tax season.
WANT TO READ MORE?
Check out this article on Military Friendly Budget Tools