Mission Possible: Conquering Tax Season with Military Family Resources

By Chavelle Zackery | DEPLOY Financial Wellness Fellow

Tax season. That magical time of year when we all pretend to understand W-2s, get overwhelmed by tax jargon, and look for ways to avoid the word “audit.” But when you’re a military family, navigating taxes comes with a few extra twists and turns. Between deployments, relocations, and various unique benefits, taxes can feel like a never-ending puzzle, one that often requires a bigger box of chocolates (or a glass of wine) to get through.

Let me tell you, the only formal tax education I received was a few weeks in my senior year economics class. Three weeks. And let's be honest, that was about as useful as learning how to read a map of Atlantis. I can clearly remember sitting there, trying to figure out what in the world "taxable income" meant, while the clock ticked down to the end of the semester. And I’m pretty sure for most students, a few weeks of “tax training” is a luxury. For a lot of people, their only real encounter with taxes comes when they file for the first time and get hit with an IRS letter that’s as terrifying as it is confusing.

So, when it comes to taxes, whether you’re active duty, a Veteran, or a military spouse, you're not alone in feeling like a fish out of water. Navigating tax season can feel like trying to decode a secret language, but it doesn’t have to be that way. Especially for military families, there are tons of resources available to help make the process a little easier (and maybe even fun?).

In this post, we’ll break down the tax basics for military families, explore those often-overlooked benefits you may be eligible for, and highlight some essential resources that can help guide you through this often-confusing time of year. There is also an interview video with Sherri Sales, who is a lovely tax expert. 

Tips for Surviving the Tax Crunch

• Start Early: Procrastination is tempting (we know, we’re all about that last-minute PCS move), but starting early will give you plenty of time to gather all the documents you need and avoid the frantic rush before the deadline. Plus, if you’re getting a refund, the sooner you file, the sooner that money can be in your account.

• Check Your Tax Withholdings: Have you been overpaying or underpaying throughout the year? The IRS’s withholding estimator tool can help you figure out if your paycheck withholdings are on target. This could be particularly useful for military families who might experience unexpected deployments or PCS orders that affect their income.

• Keep Detailed Records: With constant moves and fluctuating income, staying organized is key. Keep all receipts for moving expenses, education-related costs (yes, that college course might be tax-deductible), and any other relevant documents. The more detailed your records, the smoother your filing will go.
  
  

Common Mistakes? Let’s Dodge 'Em Like a Surprise PT Test

• Mistake #1: Forgetting to update your address or filing status after a PCS.
  ⚠️ Solution: Double-check everything. Yes, everything. Did you move? Did your filing status change? Did your dog suddenly become your dependent? (Nice try.)

• Mistake #2: Reporting combat pay incorrectly.
  ⚠️ Solution: Some or all of your combat pay may be nontaxable, but it might still count when calculating credits like the Earned Income Tax Credit (EITC). Confusing? Yep. Worth triple-checking? Absolutely.

• Mistake #3: Not using available free services.
  ⚠️ Solution: Don’t pay $200 for a tax prep service when MilTax exists (we’ll get to that!).
  
  

Deductions and Credits: AKA “The Stuff That Saves You Money”

• Combat Pay and Special Compensations:
  Some of it is tax-free (thank you, Uncle Sam), but it can still help boost your EITC or Child Tax Credit eligibility. Translation? More refund, less stress.

• Moving Expenses: Are you moving due to a PCS? You can deduct some unreimbursed costs, like travel, lodging, and shipping your stuff (but not your cousin Dave’s stuff or your new IKEA haul). Just make sure it wasn’t covered by the government already.

• Deployed? Some states offer extra tax benefits if a service member is deployed — think extended deadlines or tax-free state income. It's like a care package for your wallet.
  
  

🎖 Special Situations Need Special Attention

• National Guard and Reserve Members: If you travel over 100 miles for drill and aren’t reimbursed, you may be able to deduct expenses, mileage, lodging, and meals on your taxes. Your travel snacks are financially strategic.

• VA Disability Benefits: These benefits are not taxable. Do not report them as income, and if you got retroactive payments, check if you need to amend past returns. Uncle Sam doesn’t tax what he didn’t give you.

• Filing While Stationed Overseas: You might qualify for an automatic two-month extension, but don't forget, you still owe any taxes by April 15th to avoid interest. And yes, you still have to file, just because you’re in Germany doesn’t mean the IRS forgets you exist.
  
  

🛠 Tools, Docs, and Not-Terrible Services

• Free Tax Prep Services: 

• VITA (Volunteer Income Tax Assistance): Often available on base with trained preparers who speak fluent 1040EZ.

• IRS’s MilTax Software: The IRS has a free tax software called MilTax, specifically designed for military families. This online tool is user-friendly and includes features like handling deployment-related tax issues and reporting overseas income. You can also file your taxes for free through this service, and it’s available year-round (because let’s be real, we need all the help we can get).

• TurboTax Free Military Filing: That’s right! TurboTax offers free filing for active-duty military members. It’s easy to use, and they walk you through all the deductions you might qualify for, from moving expenses to combat pay. Plus, their online platform is a convenient way to file, no need to stand in line or brave the post office.

• IRS Tax Guide for Military Personnel: Check out the IRS Military Tax Guide for detailed information.

• Documents You’ll Need:

• W-2s (military and civilian, if applicable)

• 1099s (for freelance earnings, interest, or investments)

• LES (Leave and Earnings Statement)

• PCS orders (if claiming moving expenses)

• Receipts for unreimbursed expenses

• Info on child/dependent care, education expenses, and retirement contributions
  
  

Final Thoughts

While tax season might not be the most exciting time of year, it's the perfect opportunity to take control of your financial wellness. With all the unique benefits available to military families, filing your taxes doesn’t have to be overwhelming. By using the right resources, staying organized, and asking for help when you need it, you can make tax season a little less stressful and maybe even a little fun (okay, fun might be a stretch, but you get the idea).

📝 Got more questions? Drop them in the comments or join us for our next Money Monday session, where we tackle finance, family, and figuring it all out together.

For more tips and to connect with other military families focused on financial wellness, check out our Blue Star Families Financial Wellness Group for expert advice, peer support, and a sense of community all year long. 

Also, if you or a loved one is a father looking for a sense of community in this military world, be sure to check out BSF’s Dad chat on April 2nd, 2025, at 4 PM ET. Can’t make it? There will be more, so check out the Parenting Community for updates!