Many members of the military are able to get their tax returns prepared for free on or off most military bases including overseas locations. The U.S. Armed Forces participates in the Volunteer Income Tax Assistance program sponsored by the IRS. VITA provides free tax advice, tax preparation, tax return filing and other tax help to military members and their families.
Here are four things you need to know about free military tax assistance:
1. Armed Forces Tax Council. The Armed Forces Tax Council oversees the military tax programs offered worldwide. AFTC partners with the IRS to conduct outreach to military personnel and their families. This includes the Army, Air Force, Navy, Marine Corps and Coast Guard.
2. Volunteer tax sites. Military-based VITA sites staffed with IRS-trained volunteers provide free tax help and tax return preparation. Volunteers receive training on military tax issues, such as combat zone tax benefits, filing extensions and special benefits that apply to the Earned Income Tax Credit.
3. What to bring. To receive free tax assistance, bring the following records to your military VITA site:
- Valid photo identification.
- Social Security cards for you, your spouse and dependents, or a Social Security number verification letter issued by the Social Security Administration.
- Birth dates for you, your spouse and dependents.
- Wage and earning statement(s), such as Forms W-2, W-2G, and 1099-R.
- Interest and dividend statements (Forms 1099).
- A copy of last year's federal and state tax returns, if available.
- Checkbook for routing and account numbers for direct deposit of your tax refund.
- Total amount paid for day care and day care provider's identifying number. This is usually an Employer Identification Number or Social Security number.
- Other relevant information about income and expenses.
4. Joint returns. If you are married filing a joint return and wish to file electronically, both you and your spouse should be present to sign the required forms. If both cannot be present, you usually must bring a valid power of attorney form along with you. You may use IRS Form 2848, Power of Attorney and Declaration of Representative for this purpose.
There is a special exception to this rule if your spouse is in a combat zone. The exception allows a spouse to prepare and e-file a joint return with a written statement stating the other spouse is in a combat zone and unable to sign.
IRS Publication 3, Armed Forces' Tax Guide, has more helpful information for members of the military. You can download free publications from the IRS.gov website or order them by calling 800-TAX-FORM (800-829-3676).
Tax Rules on Early Withdrawals from Retirement Plans
Taking money out early from your retirement plan can cost you an extra 10 percent in taxes. Here are five things you should know about early withdrawals from retirement plans.
1. An early withdrawal normally means taking money from your plan, such as a 401(k), before you reach age 59½.
2. You must report the amount you withdrew from your retirement plan to the IRS. You may have to pay an additional 10 percent tax on your withdrawal.
3. The additional 10 percent tax normally does not apply to nontaxable withdrawals. Nontaxable withdrawals include withdrawals of your cost in participating in the plan. Your cost includes contributions that you paid tax on before you put them into the plan.
4. If you transfer a withdrawal from one qualified retirement plan to another within 60 days, the transfer is a rollover. Rollovers are not subject to income tax. The added 10 percent tax also does not apply to a rollover.
5. There are several other exceptions to the additional 10 percent tax. These include withdrawals if you have certain medical expenses or if you are disabled. Some of the exceptions for retirement plans are different from the rules for IRAs.
For more information on early distributions from retirement plans, see IRS Publication 575, Pension and Annuity Income. Also, see IRS Publication 590, Individual Retirement Arrangements (IRAs). Both publications are available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).