Military Personnel, Returning Veterans, and their Families

Many enlisted members of the military earn less than $30,000 and are raising children. In addition, many National Guard members and Reservists have been activated for duty, which can result in a significant reduction in a family’s income. When enlisted members transition out of the military, they tend to experience longer periods of unemployment than civilians and tend to earn lower wages. Military families and returning veterans may qualify for tax benefits such as the EIC or CTC, but may not realize they are eligible.

To address the needs of these families, the Office of the Secretary of Defense, in partnership with the IRS, has established VITA sites at 300 U.S. military installations. Military VITA sites file about 300,000 federal returns each year. While such assistance is important, it may not reach some members of the military, their families, or returning veterans. Family members who do not live near a military post and returning veterans may not get the relevant tax information they need, since they may seek help from people who are not well-versed in the special rules regarding military pay and eligibility for the EIC and CTC.

  • Contact the Family Assistance Center for the military unit in your area to ensure it is aware of the EIC, CTC, and free tax filing assistance programs in the community. The National Military Family Association provides links at its website to Family Assistance Centers for the National Guard and Reserves. The American Red Cross and the Boys and Girls Clubs of America are other organizations that provide support to families of units called up for active duty. Their local chapters may also be good points of contact for efforts to reach military families. Contact the Government Relations Department, National Military Family Association, at 1-800-260-0218 or at info@MilitaryFamily.org for suggestions on who to contact or visit www.militaryfamily.org/resources/links/family-assistance-sites.html.
  • Connect with programs designed to support returning veterans. The Departments of Defense, Veterans Affairs, Transportation, and Labor partner to provide the Transition Assistance Program (TAP), which consists of three-day workshops for returning service members to learn resume-building, interview skills, tips for securing employment as well as information about veteran benefits. Similarly, Transition Assistance Advisors (TAA), in conjunction with the National Guard Bureau, provides support by phone, email and in person to link all service members to community resources and assistance in obtaining veteran healthcare services and benefits. Contact your local TAP or TAA office to discuss opportunities to share tax credit information with returning veterans. To locate a TAP or TAA office near you, visit: www.vet-trans.com and click on “Transition Tools.”
  • Engage job training and vocational programs. Returning veterans are often faced with the need to go back to school so that they can secure employment. Inform job-training programs about the EIC, CTC, and free tax filing assistance.
  • Contact a nearby military installation that has a VITA site. Ask whether veterans recently leaving the military might be able to use the VITA services offered at the post or base.
Tax Credit Outreach IN ACTION

United Way of Northeast Florida in Jacksonville coordinates the Real$ense Prosperity Campaign, which operates 64 free tax filing assistance sites. In 2013, Real$ense managed a new site at the Jacksonville Naval Air Station to serve military personnel, veterans, and their families after the station’s military-sponsored VITA program scaled back its services to only offer self-assisted tax filing (which allows taxpayers to complete their own returns, requesting help as needed).

To reach the military community in Jacksonville, the campaign enlisted the naval air station’s communications office to advertise the Real$ense VITA site using its on-base digital billboard. Real$ense posted ads in newspapers and displayed signs near the front entrance of the base and in neighboring areas. Real$ense briefed call center specialists for the United Way’s 2-1-1 help hotline so that they could share information about the new VITA site. While advertising efforts primarily reached the military community, the on-base site offered free tax preparation to civilian clients as well.

VITA site staff were required to enroll in an additional training class on common tax concerns for military families and obtain a VITA Military Certification. Most of the volunteers had a military background and a particular interest in assisting military families.

During the 2013 tax season, the Jacksonville Naval Air Station’s VITA site served over 500 military families with returns generating $788,845 in total federal refunds, including $142,253 in EIC refunds.

Contact: Jeff Winkler, United Way of Northeast Florida, (904) 390-3207, jeffw@uwnefl.org

Glad You Asked That!

Q: What do military personnel need to know about claiming the EIC and the CTC?

A: Military personnel can claim the credits or be considered a qualifying child for the EIC or CTC whether they live in the U.S. or overseas. The IRS considers an individual assigned to an overseas tour of duty to be temporarily absent from the U.S. due to a special circumstance. Even if qualifying children remain in the U.S., the children may be claimed for the EIC and the CTC. Military couples living apart due to a military assignment must still file a joint return to claim the EIC and the CTC.

Q: How is combat pay counted in determining eligibility for the EIC and CTC?

A: Military pay received in a combat zone is non-taxable earned income, but it is treated differently than other forms of non-taxable earned income for EIC purposes. Military personnel can choose to count combat pay when figuring their eligibility for the EIC if it is an advantage. For example, adding combat pay to a family’s earnings might raise the family’s income above the EIC eligibility limit and the family would not want to count it. However, in families with little income, counting combat pay could result in a larger EIC and the family would want to do so. Combat pay must be counted as income in figuring the CTC. For the CTC, counting combat pay will always work to the family’s advantage, enabling more military families to qualify.