SPRINGFIELD, IL (02/04/2012)(readMedia)-- As servicemembers start to receive their W2's in the mail, now is the time to prepare to file your 2011 tax returns and learn what opportunities are available for military members.
"There are many programs at the state and federal levels providing tax credits for members of our military in recognition of their sacrifices for the nation," said Lt. Col. Tammy Duckworth of Hoffman Estates, Deputy of Human Resources for the Illinois Army National Guard. "It is important that our troops are aware of these benefits and not leave any money on the table when those dollars can be helpful to our families and employers."
If a servicemember is eligible under the Military OneSource program, he/she can complete, save and file their 2011 federal taxes and up to three state tax returns online for free with the H&R Block At Home® tool. To access this free service, use the Military OneSource H&R Block At Home® link. The first step is to log in to Military OneSource (new users will need to create a Military OneSource account). From there, users will be directed to a page with additional information on tax preparation, including a link to the Military OneSource H&R Block At Home® service.
In addition to filing taxes for free, servicemembers can get support from trained tax consultants through Military OneSource. Servicemembers and families can call 1-800-342-9647 and ask to speak with a Military OneSource tax consultant seven days a week from 7 a.m. to 11 p.m.
Federal tax benefits for hiring many veterans are available to business owners in any state. The federal benefits are available under the Work Opportunity Tax Credit (WOTC) Program. There is up to a $2,400 credit if there is:
• a veteran who is a member of a family that has received food stamps for at least three consecutive months in the 15 months prior to the date of hire
• a person with disability who is participating in a vocational rehabilitation program through U.S. Veteran's Administration
There is also a WOTC credit of up to $4,800 for veterans entitled to compensation for a service-connected disability who:
• were hired within one year of having been discharged, or released from activity duty
• has been unemployed for any six of the last 12 months
Employers hiring multiple WOTC qualified employees can make a significant dent in their federal income taxes. These benefits are explained and claimed on IRS Form 5884.
Currently, 26 states offer partial or total exclusions, from state-level taxes for combat and/or other military compensation paid to servicemembers. There are five states offering outright tax exemption for military pay, including Illinois.
Combat pay received by members of the military serving in Afghanistan, Iraq and other combat zone localities is usually exempt from tax. But under a special rule, servicemembers can choose to count all of this income when he/she figures the Earned Income Tax Credit. In many cases, making this choice will enable the servicemember to claim the credit, or if you are already eligible, claim a larger credit.
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