Tax Deductions 101 for Guard and Reserve
By Sara Horn
Most spouses already know that the pay service members earn while deployed to places like Iraq or Afghanistan are tax-free, but not everyone realizes that there are other ways you can save on your tax bill—even when your soldier’s not deployed.
Did you get all the deductions you could have for 2009? If not, get started for next year. Here are a few you don’t want to miss:
Travel
If your reservist drills more than 100 miles from home, travel costs like mileage, 50 percent of meals and cost of lodging can all be tax deductible if not reimbursed by the military.
Uniform
If your service member is prohibited from wearing his or her uniform when not on duty, there are several tax deductions to be aware of.
- Dry-cleaning costs
- Alteration costs
- Uniform costs not reimbursed by military
- Additions such as corps device, epaulets, aiguillettes, swords, rank insignias
- Boots and shoes
Home Office
If your Reserve or Guard member does any work for the military outside of drill weekends, you should consider setting up a home office space.
The IRS has strict requirements on what constitutes a home office. A home office must be the principal place for your trade or business or a place where you regularly meet with clients, customers or patients.
In some cases, you can also meet the principal place of business requirement if you conduct substantial administrative and management tasks for your outside business at home and have no other fixed location where you can conduct these activities.
These tasks might include correspondence with other reservists, writing reports or doing other necessary paperwork related to a military job. To qualify for a home office deduction, you must also meet the “regular and exclusive” test, which means you must be able to show that your office is used exclusively for work on a consistent basis and doesn’t also serve as something else like the family TV room.
Once you qualify for a home office, there are several deductions to consider. (Not all of these are 100 percent deductible; the majority is apportioned based on the size of your home office relative to the rest of your house and there are spending and percentage limits that can also be a factor.)
- Home owner association fees
- Utilities including water, electricity, gas heat, garbage pickup
- Home insurance, mortgage or rent payments, maintenance costs
- Office supplies
- Home office phone and voicemail
- Internet access, laptops or computers or other office equipment required for work
Magazine/News Subscriptions
Magazines, newsletters, newspapers, books or online news subscriptions are tax-deductible if related to work, military service, personal investments or a job search.
Always consult a tax professional with questions on tax deductions and other tax-related information.
Resources to know about:
- Military One Source (www.militaryonesource.com) offers free tax consultations and free online tax preparation services.
- Tax Deductions A to Z for Military & Reservists by Anne Skalka, CPA
Sara Horn is the wife of a Navy reservist and covers Guard and Reserve issues for Military Spouse.