Military members are given numerous tax breaks. One such benefit is the Military Family Tax Relief Act of 2003. On November 11, 2003, President George W. Bush signed the act (H.R. 3365), providing specified tax relief to members of the Armed Forces. A summary of the legislation that directly impacts military tax returns is provided.
When you envision retirement, you probably see yourself living comfortably, doing what makes you happy. Your dreams could be as lofty as traveling the world or as simple as spending more time with your friends and family. Everyone’s vision is unique.
Determining your retirement income needs is a process that helps you identify your retirement planning needs based on your desired standard of living and the resources you’ll have available. Today, you can typically no longer rely on Social Security benefits and a military pension check to fulfill all your retirement income needs.
Life insurance is a way to protect your loved ones financially after you die and your income stops. Military families have special circumstances to consider while deciding on life insurance protection.
Social Security is a federal system of programs designed to protect individuals and families against economic hardship. Most Americans work in occupations covered by the Social Security system, and they will at some point in their lives receive Social Security benefits.
The federal government provides tax relief to qualifying individuals in the form of tax credits. Tax credits are valuable because they are dollar-for-dollar reductions of your tax liability. In some cases, they may result in tax refunds.
You can elect to include your nontaxable combat pay in earned income for the earned income credit. If you make the election, you must include in earned income all nontaxable combat pay you received. If you are filing a joint return and both you and your spouse received nontaxable combat pay, you can each make your own election.
The amount of your nontaxable combat pay should be shown on your Form W-2 in box 12 with code Q. Electing to include nontaxable combat pay in earned income may increase or decrease your EIC.
Figure the credit with and without your nontaxable combat pay before making the election. Whether the election increases or decreases your EIC depends on your total earned income, filing status, and number of qualifying children.
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Ready for next lesson? Learn more about Earned Income Credits
To be eligible for the EIC, you must fall within certain income guidelines. To qualify for the full amount of the EIC, your earned income and AGI must each be less than:
To determine your eligibility for the Earned Income Credit (EIC), the following conditions apply to what is considered a qualifying child.
Most individuals (those who file on a calendar year basis) must file their federal income tax returns for a given year by April 15th of the following year, unless they apply for or are entitled to an extension.