By Tammy Fink
Special to GUIDON
It’s time for the annual ritual of filing taxes. The Fort Leonard Wood Financial Readiness Office has some tips to ensure money is going where it should.
Receiving a large tax refund seems to be the goal of many tax payers, when in fact, if they are estimating a large tax refund, they may be paying way too much through payroll deductions.
Would someone go to the store, buy a candy bar for $2, give the clerk a $50 bill and say, “I will be back next January to get my change?” That is essentially what someone is doing if they are receiving large tax refunds.
Be sure to pay enough so that no money is owed at the end of the year, but not too much that there is no enjoyment from hard earned money until filing taxes.
Active-duty service members can also save on their state taxes with the military pay exclusion on their state returns. Many states across the country exempt all military taxable income from being taxed in their state — to name a few: Pennsylvania, Kentucky, Oklahoma, Arkansas, Ohio and Illinois.
To check if there are exemptions in a home of record state, log onto the taxing authority website and search for military. Many of the states have specific publications for military income just like the Internal Revenue Service.
So, how does one figure out what is supposed to be withheld? It’s a simple math problem.
Look at the federal and state withholding on MyPay or with a human resources staff member. The best way to decide how much to withhold is to ask a few questions, like “am I single or married?” and “how many people are in my household that will be on my return?”
Then, the rest is easy. Take for instance that someone is single and does not have dependents. This filing status would be single with one exemption. If someone is single and has two children, or a child and a parent, then he will have withheld single and three; one for himself and one for each of his dependents.
Let’s say this person is married, his spouse is not working and they have one child; his withholding would reflect married with three exemptions. Now, if he and his spouse are both working, then they must decide who will take what exemptions, so in the previous example of a married couple with one child, they have three to split between the two of them.
He may take married and two, and his spouse takes married and one, or he may take married and zero and his spouse takes married and three. It’s a math problem.
If tax treatment of military pay and entitlements is confusing, log onto www.irs.gov and search for Publication 3. This is a guide to filing taxes. It is packed with allowable exclusions, deductions, credits and adjustments to tax returns that only military personnel are able to take.
Contact the Fort Leonard Wood Tax Center to receive answers to your tax questions. The tax center is open and military members, their families and retirees can take advantage of its free tax preparation services.
The Fort Leonard Wood Tax Center is open from 9 a.m. to 4:30 p.m. Mondays through Thursdays, 9 a.m. to 3 p.m. Fridays (with an 11:30 a.m. to 1 p.m. lunch break) and 9 a.m. to 1 p.m. the first and third Saturdays of each month.
While the tax center’s goal is to assist as many eligible individuals as possible, there are certain types of tax returns that the tax center is not authorized to handle.
Taxpayers with complex situations, such as owning rental properties, should call ahead for guidance.
Having someone else prepare your taxes isn’t preferable? There are many online tax programs that are free for those who make less than $69,000 per year. Visit www.militaryonesource.mil to get connected to these services.
Finally, Puerto Rico residents now have a federal tax exclusion for bona fide residents. That’s right — in November 2017, a new law took effect allowing bona fide Puerto Rico residents to exclude their income from federal taxation and begin paying taxes to Puerto Rico. This could save many Puerto Rico residents thousands of dollars a year.
For further assistance on specific tax questions, contact the local tax center at 573.596.0131, or call the IRS at 800.829.1040.
(Editor’s note: Fink is a Personal Financial Readiness specialist at the Fort Leonard Wood Financial Readiness Office.)