A former member of the US armed forces who served on a regular basis for no fewer than two years and who was not dishonorably dismissed is considered a veteran, according to the IRS. Remember that you, your partner, your kids, and your parents may be eligible for tax advantages as a veteran when you have time for you to submit your taxes.

It's crucial to remember that soldiers are former military personnel who have received their pensions. A member of the armed services who is serving on active duty is not regarded as a veteran. In this extensive article, we'll concentrate just on tax benefits for veterans. For further information on tax benefits for deployed and retired military personnel, read this article.

5 Tax Breaks Available for Veterans

Veterans may take advantage of several perks from the federal government, but some are particularly beneficial when it comes to paying taxes. If you qualify as a veteran, you need to be aware of these five tax incentives. Let's discuss these benefits in detail.

Income Exempt from Taxes

Federal taxes are levied on the majority of military pensions. On the other hand, disability payments are tax-free if you get them in addition to or instead of your pension. They are not even required to be included on the return you submit. Assistance and Attended (A&A) or other benefits may also be available to veterans who have a specific handicap and/or are confined to their homes.

These perks might assist in defraying the expense of employing caregivers or supporting a spouse who fills that role. Benefits such as A&A and Housebound are not subject to state or federal taxes.

The following other VA benefits are not included in taxable income:

• Funds for building or renovating a house so that it is handicap accessible.
• Grants for veterans who are blind or have lost the use of a limb to purchase cars.
• Benefits from a program for assistance with dependent care.

More Time to Submit Corrected Tax Returns

Generally, you may make changes to your tax return and receive a refund of excess taxes within three years of the date you filed. Veterans may have an extended period of time to file revised tax returns. A veterans advocacy group called the National Veterans Legal Services Program learned a few years ago that the Defense Financial and Accounting Service had been paying taxes from disability severance payments using an antiquated procedure.

Many veterans are, therefore, entitled to reimbursement for lump-sum disability benefits. Unfortunately, not many veterans were aware of such benefits in time to file an updated tax return within the normal three-year limit. The Combat-Injured Veterans Tax Fairness Act of 2016 was approved by Congress in 2016 and gave some veterans an extension on filing an updated return and obtaining a tax refund. In July 2018 and July 2019, the Department of Defense (DOD) addressed letters to the impacted veterans.

In order to submit Form 1040-X for the tax year in which the disability severance payment was given, veterans who received these letters must do so by the later of:

• A year following the DOD notification date.
• Three years following the very first tax return filing deadline for the year when the disability severance payout was received.
• Two years passed after the year the claim for disability separation payout was made, and the tax payment was made.

Tax-free Educational Support

Benefits for education and training, such as the Posting-9/11 GI Bill, are available to veterans and their dependents to assist with the cost of undergraduate, graduate, or on-the-job training. You are not required to report this school support on your tax return, nor is it subject to taxation.

Credit for Earned Income Tax

The Earned Income Tax Credit (EITC), which is intended to assist low- to moderate-income professionals and their families, is also available to a large number of veterans. Since the EITC is a recoverable credit, you may be eligible for a tax refund that is more than what you paid in taxes through anticipated tax payments or withholding if it lowers your tax l burden to zero.

You have to have received income in order to be eligible for the EITC. In addition to earnings and salary, this can also refer to long-term disability compensation obtained prior to reaching the stipulated retirement age. Every year, the maximum credits and income limitations change. You can find and take advantage of your possible tax credits with the aid of filing your taxes using online software.

Free Tax Planning

In its local communities and beyond, Intuit is an ardent advocate of US military personnel, veterans, and their families. As part of that pledge, online software provides free both state and federal tax filing through online merchandise, which includes a Free Version for basic income taxes only, a Deluxe, and a Premium, to US engaged active duty the Armed Forces reserve troops and National Guard E1-E9. When everything is said and done, eligible veterans may be able to claim a number of different tax savings. For the most current and accurate information available, visit the official websites of Veteran Affairs and the IRS if you have any more concerns.

The Bottom Line!

Being aware of the tax breaks available for veterans is crucial for optimizing financial benefits. From tax-exempt income and extended filing periods for corrections to tax-free educational support and eligibility for the Earned Income Tax Credit, veterans can significantly enhance their financial well-being. It's reassuring to know that organizations like Intuit and TurboTax are dedicated to supporting the military community by offering free tax filing services.

As tax regulations and benefits may evolve, it's advisable for veterans to stay informed by checking the official websites of Veteran Affairs and the IRS for the latest updates and accurate information. By taking advantage of these tax breaks, veterans can explore the tax world more effectively and secure the financial advantages they rightfully deserve.