Under the Tax Cuts and Jobs Act, which went into effect on January 1, 2018, specific changes have been made to the federal tax code that could have special implications for members of the military as they file their 2018 taxes.
Specifically, the new tax law has eliminated the deduction for moving expenses — but military personnel may be exempt from this change in certain circumstances. Under the old rule, taxpayers who moved to a new location for work and met specific criteria qualified to deduct moving expenses from their taxes. Under the new rule, moving-expense deductions have been suspended through 2025 except for members of the armed forces, who can still deduct moving expenses as long as the move is part of an authorized permanent change of station.
Additionally, the new tax law has nearly doubled the standard deductions. Under the old rule, taxpayers who did not itemize could claim the standard deduction of $6,350 for single individuals, $9,350 for heads of household, or $12,700 for married couples filing jointly. Under the new rule, taxpayers who do not itemize can claim the standard deduction of $12,000 for single individuals, $18,000 for heads of household, or $24,000 for married couples filing jointly.
The maximum child tax credit, and the income thresholds for taking that credit, have also increased, meaning many more taxpayers qualify. Under the old rule, the child tax credit was $1,000 per child under age 17, with reductions in credit occurring for each $1,000 a taxpayer earned over $75,000 in income for single individuals and heads of household, and $110,000 for married couples filing jointly. Under the new rule, however, the child tax credit increases from $1,000 to $2,000 per qualifying child. The credit begins to phase out for individuals with incomes over $200,000; for married couples filing jointly, phase-out starts at $400,000.
Under the new tax law, the majority of service members will see their taxes decrease. How much each individual’s taxes will change depends on factors including income, marital status, children, and property ownership. Military OneSource MilTax provides free online tax preparation, e-filing services and access to tax consultants for service members and their families. For help filing your taxes, contact the MilTax program via internet or phone: http://www.militaryonesource.mil/taxprep or 800-342-9647. Tax preparation is available to service members and their families at locations across the world through the Volunteer Income Tax Assistance (VITA) program.
The VITA program also helps non-service members. To find free in-person or online tax preparation help, visit MontanaFreeFile.org.