Tax info

[Dupe]

Dupe, is the amount in block 12 (with a Q) the amount we are supposed to get back on our tax return?

Nope. That's the amount of tax free combat zone income that you've earned in the calender year. It includes all of your pay earned during the months that you were in a combat zone, your "daily pay" for days that you took tax free leave, and any bonuses paid while down range (that one's an enlisted-only deal). The 'D' code in box 12 are your "tax deferred" TSP contribuitions and the 'E' code in box 14 are your "tax-exempt" TSP contributions (i.e..contributions you made while down range). Box 1 on your W-2 is the only amount that goes into figuring your taxable income for federal purposes.

Your non-taxable combat zone income doesn't usually enter into any tax calculations or problems. One case I can think of was a young enlisted guy who deployed most of the year. Because he didn't have any hardly any taxable income, he thought he wasn't entitled to Earned Income Credit. However, he could elect to include his non-taxed combat zone income for his EIC calculations. I ended up getting him an extra 2.5 Grand for his family.

[Guest sweethomeco]

Tax question that hopefully someone can answer for me...

Usually, I use the free guys on base to do our taxes, but I figure I should learn how to do my own rather than relying on someone else.

If I use Turbo Tax, will it be easy for me to figure out?

Our taxes are a bit complicated (I think anyway): My husband has Colorado residency, I work both in Colorado and as a freelance writer in Oklahoma (contract employee, so I pay no taxes throughout the year and just pay them at the end in one big, painful lump sum). I also worked for about 5 months this year as a full-time employee in Oklahoma. So, I'm a bit confused on how to file both Colorado and Oklahoma.

As I look at this now, I'm thinking, screw it, I'll just take it to the guys on base.

[Jenkspaz]

Tax question that hopefully someone can answer for me...

Usually, I use the free guys on base to do our taxes, but I figure I should learn how to do my own rather than relying on someone else.

If I use Turbo Tax, will it be easy for me to figure out?

Our taxes are a bit complicated (I think anyway): My husband has Colorado residency, I work both in Colorado and as a freelance writer in Oklahoma (contract employee, so I pay no taxes throughout the year and just pay them at the end in one big, painful lump sum). I also worked for about 5 months this year as a full-time employee in Oklahoma. So, I'm a bit confused on how to file both Colorado and Oklahoma.

As I look at this now, I'm thinking, screw it, I'll just take it to the guys on base.

My situation isn't that complicated, but it follows along some of the same lines:

Earlier last year I claimed residency in Missouri, but lived in Kansas. I also worked in Kansas for 4 months. Then I moved to TX. I now claim residency here, and work here full time. I used TurboTax this year, and they ask every question step-by-step. VERY easy to use. If you want to try it out, you can start it online for free and see if you like it or not.

[MilitaryToFinance]

Tax question that hopefully someone can answer for me...

Usually, I use the free guys on base to do our taxes, but I figure I should learn how to do my own rather than relying on someone else.

If I use Turbo Tax, will it be easy for me to figure out?

Our taxes are a bit complicated (I think anyway): My husband has Colorado residency, I work both in Colorado and as a freelance writer in Oklahoma (contract employee, so I pay no taxes throughout the year and just pay them at the end in one big, painful lump sum). I also worked for about 5 months this year as a full-time employee in Oklahoma. So, I'm a bit confused on how to file both Colorado and Oklahoma.

As I look at this now, I'm thinking, screw it, I'll just take it to the guys on base.

TurboTax will make filing the federal portion very easy. That is what I use and I'm pretty sure I could train a chimp to do my taxes for me. But the state portions may be more complicated. Turbo Tax charges like $30 to file state taxes and I'm guessing they'd try to charge you for each state. If the free tax guys on base can handle it I'd stick with them.

[sirjrod00]

I guess this is a good spot for some tax questions...

On my W2, block 12 is where my tax-free pay is listed from being deployed. Is that amount already taken out of blocks 1 and 2? If not, when I calculate my taxes on taxslayer I don't see that amount anywhere or even a spot to put it in.

I'm living in NC...I am claiming TX as my state but my spouse is obviously claiming NC. When I calculate the taxes and do the state return, taxslayer is assuming we are both using NC and saying we owe a ton of taxes to NC. Anyone out there using taxslayer have any insight on how to fix this?

[itsokimapilot]

TurboTax will make filing the federal portion very easy. That is what I use and I'm pretty sure I could train a chimp to do my taxes for me. But the state portions may be more complicated. Turbo Tax charges like $30 to file state taxes and I'm guessing they'd try to charge you for each state. If the free tax guys on base can handle it I'd stick with them.

Just did mine with the H&R Block program through militaryonesource. The state filing is free as well with them.

[Finance_Guy]

I guess this is a good spot for some tax questions...

On my W2, block 12 is where my tax-free pay is listed from being deployed. Is that amount already taken out of blocks 1 and 2? If not, when I calculate my taxes on taxslayer I don't see that amount anywhere or even a spot to put it in.

I'm living in NC...I am claiming TX as my state but my spouse is obviously claiming NC. When I calculate the taxes and do the state return, taxslayer is assuming we are both using NC and saying we owe a ton of taxes to NC. Anyone out there using taxslayer have any insight on how to fix this?

I'm pretty sure block 12 is for TSP contributions (Code D) and for Tax Free wages (Code Q). Either way both amounts should already be reduced from your block 1. Block 1 is only for wages and 2 is for tax withheld. They all should be aligned correctly. To double check just multiply your base pay times the number of month(s) tax-free and that should equal the code Q amount.

Don't know about taxslayer, but I've had a similar situation and we had to file in both states. Wife did her's in the state we were living as out of state resident (my income was exempt), then for the one we claimed residency, we got credit for taxes paid in the non-resident state. I don't think all these online tax programs work the greatest for state taxes for military with these type situations. May be best to have the base tax office help with at least the state filing.

[backseatdriver]

Heads up about taxfreedom.com - if your AGI is greater than $56,000, e-filing is NOT free for military, costs $14.95.

[sirjrod00]

I'm still having an issue trying to figure out the state taxes. I'm a TX resident (no state tax) and my wife is a NC resident. I filed through taxslayer, but the program kept adding my income in with hers for the state taxes, meaning we owed NC taxes. All I want to do is e-file her state return, but I can't find a site that will allow me to do that. I went to the NC tax website where they list some places you can e-file federal and state, but each wants me to do the federal part and then they will import that info to the state and file both. Anybody have any idea how to file just the state?

[Finance_Guy]

I'm still having an issue trying to figure out the state taxes. I'm a TX resident (no state tax) and my wife is a NC resident. I filed through taxslayer, but the program kept adding my income in with hers for the state taxes, meaning we owed NC taxes. All I want to do is e-file her state return, but I can't find a site that will allow me to do that. I went to the NC tax website where they list some places you can e-file federal and state, but each wants me to do the federal part and then they will import that info to the state and file both. Anybody have any idea how to file just the state?

This weblink might help. http://turbotax.intuit.com/tax-tools/tax-t...lists/5608.html

I'm assuming your wife earned wages in NC? If so, you should figure out how to file your portion as a non-resident (somehow would be a subtraction from total income). I'm gonna bet the only way is by the good old paper method. BTW, the NC tax website (http://www.dornc.com) doesn't provide much good information--Worst I've seen. Some states let you file online through their own service for free.

[Dupe]

I'm still having an issue trying to figure out the state taxes. I'm a TX resident (no state tax) and my wife is a NC resident. I filed through taxslayer, but the program kept adding my income in with hers for the state taxes, meaning we owed NC taxes. All I want to do is e-file her state return, but I can't find a site that will allow me to do that. I went to the NC tax website where they list some places you can e-file federal and state, but each wants me to do the federal part and then they will import that info to the state and file both. Anybody have any idea how to file just the state?

I found this on the North Carolina Department of Revenue website:

If you filed a joint federal return and one of you was a nonresident of North Carolina who had no North Carolina taxable income, you may file a joint State return. However, you still have the option of filing your State return as married filing separately. If you choose to file a separate North Carolina return, you must complete either a federal return as married filing separately reporting only your income, deductions, and exemptions, or a schedule showing the computation of your separate federal taxable income and attach it to your North Carolina return. You must also include a copy of your joint federal return unless your federal return reflects a North Carolina address.

Here's what you do to meet that: Go into whatever program you're using, and enter only your wife's income for the federal parts. Make sure you select "Married Filing Seperately." Work through her entire federal return, but DO NOT FILE IT. Instead, simply print out the results.

Using the results (probably just AGI) from your wife's theoretical federal return, fill out a NC state return with her status as "Married Filed Seperately"

Since you've already filed a federal return, probably the easiest way to do all that is with a mechanical pencil, a calculator, and down-loaded tax forms. If it flumuxes you too much, walk into your VITA office on base and have them take care of it. I did it all the time when I was a tax volunteer last year, and it was only a few button-clicks to sort out the married with two seperate state-of-residences issue.

[FUSEPLUG]

Heads up about taxfreedom.com - if your AGI is greater than $56,000, e-filing is NOT free for military, costs $14.95.

Another heads up - be careful as you navigate through. Apparently TurboTax now has ways to upgrade your service with little or no notice. I've used the program for free for 4 years now and as I get to the end of my return this year, they want $34 to e-file my returns. I read through some of the online community forums and apparently a lot of people are getting snared into an upgraded service without even knowing it. The only way to fix the problem - create a new account and start over.

Needless to say a lot of TurboTax users (including me) are pretty pissed off. So, on principle, I went over to TaxSlayer.com and tried their free service for military members. The interface isn't as pretty or intuitive as TurboTax's, but with my previous year's returns and some pilot math I was able to get my 1040's just right and got my refund to within $14 of what TurboTax calculated before stabbing me in the back. And TaxSlayer truly is free to military members!

[Chida]

I just filed mine and was able to get a little bit more money back because the University I went to for grad school (part time) is in a "Midwestern Disaster Area" (Pulaski County, AR). I had to pay a little bit this past year because Tuition assistance didn't cover all of it (and I didn't have GI bill and post 9/11 GI bill hadn't come out yet). Plus if you're in a Midwestern Disaster area you can claim the cost of your books. That's something I had to look up myself though, because TurboTax wasn't smart enough to know that I live in the disaster area. Also if you're Active duty you can claim your spouse has switched to your own tax domicile (Texas for me) and save a bit there.

Edited January 24, 2010 by Chida

[contraildash]

I just finished my taxes through H&R Block online. I used TurboTax the past 4 years, but this year their program was a pain in the ass. Plus you have to pay to file your state taxes electronically. I like the free and easy H&R stuff I just used! I also like going TDY to tax free/combat zones...made a huge difference!

Side note/question:

I did a partial DITY to put stuff in storage prior to my OCONUS PCS, but only got around $250 for it. But didn't see a W-2 for it (like some of the posts above are concerned about) Do I even have to worry about that?

[stract]

from looking at my W-2, it looks like I got too much non-taxable income as compared to last year's W-2 with a similar number of tax-free (CZTE) months. On the order of $10k different, give or take. I think maybe this stems back to the issue of my CZTE not being stopped from Feb-Jul, even though I've already resolved those debts and taxes. Who do I need to talk to about examining my W-2?

[Magellan]

Special Rules for Members of the Military, the Foreign Service

and the Intelligence Community

Congress has acknowledged the unique circumstances affecting members of the military, the foreign service and the intelligence community by making the following exceptions that apply to both the $8,000 tax credit for first-time home buyers and the $6,500 tax credit for repeat home buyers.

Exemption From Tax Credit Recapture Rules

* Typically, homes that are sold or that cease to be used as a principal residence within three years of the initial purchase are subject to recapture of the tax credit.

* However, qualified service members who sell or move from a tax credit home within three years of the initial purchase due to official extended duty are exempt from the recapture rule.

Extension of Tax Credit Deadlines

* The home buyer tax credit is available for qualified purchases with a binding sales contract in place on or before April 30, 2010 and closed by June 30, 2010.

* However, for qualified service members who are ordered on a period of official extended duty, these dates are extended for one year. For these home buyers, the tax credit applies to sales with a binding sales contract in place on or before April 30, 2011 and closed by June 30, 2011.

Definitions

* “Qualified service member” means a member of the uniformed services of the U.S military, a member of the Foreign Service of the U.S., or an employee of the intelligence community.

* “Official extended duty” means any period of extended duty while serving at least 50 miles away from home for a period in excess of 90 days.

Is exactly what the first time home buyer website says here.

My question is this. If I buy a home and use the tax credit would a deployment longer than 90 days allow me to then move into another house when I got back without having to forfeit the cash since I was more than 50 miles away and for longer than 90 days? Assuming I do this before the 3 year mark at which point this question becomes irrelevant.

[Guest kork13]

Quick question regarding the DITY W-2's discussed above... I completed a DITY and filed it in early December. However, the processing seems to have been delayed for some reason, and I didn't receive the payment until a few days ago (late Jan). Should I expect a Travel W-2 for my DITY for 2009 for inclusion with my '09 taxes, or (because the payment was in 2010) will I not get that until NEXT year (for inclusion with my 2010 taxes)? This is my first DITY with the AF, so kinda new to the game.

[Finance_Guy]

Quick question regarding the DITY W-2's discussed above... I completed a DITY and filed it in early December. However, the processing seems to have been delayed for some reason, and I didn't receive the payment until a few days ago (late Jan). Should I expect a Travel W-2 for my DITY for 2009 for inclusion with my '09 taxes, or (because the payment was in 2010) will I not get that until NEXT year (for inclusion with my 2010 taxes)? This is my first DITY with the AF, so kinda new to the game.

If the payment date was 1 Jan 2010 or after, it will be considered 2010 Income. Make a note to remind yourself to look for it a year from now. They should also be in myPay then...let's hope.

[Jaded]

What's the advantage of putting tax-free deployment wages into your TSP? By my understanding, the TSP is like an unmatched 401k, which is very similar to a traditional IRA.

If you invest a tax-free 5k in your TSP, and 20 years later you're at retirement with an additional 5k in earnings, you end up with 5k tax free and 5k taxable. If you were to invest the same tax-free 5k in just a normal brokerage, and ended up at retirement with the same 5k earnings in that normal brokerage, you'd end up with a 5k tax free and 5k taxable. Is this correct?

I keep reading that if you deploy, this is a good strategy for retirement savings after you've maxed your Roth for the year, and I'm wondering what I'm missing.

[Jughead]

If you invest a tax-free 5k in your TSP, and 20 years later you're at retirement with an additional 5k in earnings, you end up with 5k tax free and 5k taxable. If you were to invest the same tax-free 5k in just a normal brokerage, and ended up at retirement with the same 5k earnings in that normal brokerage, you'd end up with a 5k tax free and 5k taxable. Is this correct?

No, because that same $5K would be lessened by the taxes you'd pay along the way. If you acheived that growth solely in the form of capital gains at the end of the 20 years, then the amounts would be the same. If (as is FAR more likely) your gains include dividends and/or capital gains along the way, you pay taxes on it as you go, reducing the amount available for compounding. "Tax deferred growth" is less attractive than "tax free growth," but once you've maxed your Roth, the TSP can be an effective way to get the deferral.

EDIT to add: Oh, and unless you withdraw the entire amount at the end of the period, the tax deferral continues on each dollar until you actually withdraw it....

Edited February 12, 2010 by Jughead

[Finance_Guy]

Now I'm being told that the voucher wasn't processed until Jan 4th of this year however I was paid in Dec and apparently I won't get the W2 until next year. Doesn't make sense to me.

If you were Paid in Dec it's considered 2009 income and you should get a W2 for 2009.

Here's an update on the myPay W2s for Travel Payments (DITY & Civilian Pay). Appears they had a data load problem.

ALCON,

We were just notified by DFAS that the Travel and Miscellaneous W-2 link has been turned off again. After several travelers reported they couldn't find their W-2's on line they discovered there was a problem with the initial load. They expect to have the files reloaded and the link turned back on by end of day Tuesday, Feb 16. We'll let you know once the link is actually activated again.

[afthunderchief16]

Was wondering if FG or anyone else might be able to answer my question I found when I started filing my return.

For my PCS W2 the AF has me down as a CO resident for the state taxes portion even though I claim TX for residency. There were no taxes taken out but they still have it under the state and local wages box.

Does this really matter for anything? Should I even waste my time going to finance to get an amended W2? Thanks much

[Guest KM]

For my PCS W2 the AF has me down as a CO resident for the state taxes portion even though I claim TX for residency. There were no taxes taken out but they still have it under the state and local wages box.

Does this really matter for anything? Should I even waste my time going to finance to get an amended W2? Thanks much

Unfortunately, it matters. If your W-2 has CO for your state, CO will think you owe them taxes. It would probably be less hassle to get the amended W-2 than to argue with the state of CO later about whether or not you owe them money.

[Finance_Guy]

Unfortunately, it matters. If your W-2 has CO for your state, CO will think you owe them taxes. It would probably be less hassle to get the amended W-2 than to argue with the state of CO later about whether or not you owe them money.

I'm asking DFAS what the rule is and if you need one changed, what that process is. I want to say the default is the new state you PCS'd to, but logically it should normally be the same state you claim on your pay record.

[Finance_Guy]

For my PCS W2 the AF has me down as a CO resident for the state taxes portion even though I claim TX for residency. There were no taxes taken out but they still have it under the state and local wages box.

I'm told you should send the request DLI-W2-Inquiries@dfas.mil so they can send a replacement W2. They can make the changes up until March 15th. After that, they can only make changes with a W2C.

Provide them your info from the DITY Move. They may need your SSAN and be sure to let the know the correct state you need on the W2--should match what is on your LES.