Taxes

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Tax Filing Tips and Tax Credits

Simple tips for holding onto your hard-earned money at tax time.

The Advance Child Tax Credit - what you need to know

This article answers Frequently Asked Questions (FAQs) about the new Advanced Child Tax Credit Payment

CRSC?

Question:

Hello Jim, I hope that you can answer this question or send me in the right direction. Is there a law that states that if Combat Related Special Compensation (CRSC) entitlement exceeds retirement pay then you are only entitled to have your retirement pay tax free and not the full amount of CRSC. I understand that I'm only allowed to receive CRSC or retirement pay. My CRSC rating is 100%.

 

Jim's Reply:

Each individual tax situation is so different that I hesitate to try and answer your questions. I'll let you in on a family secret though...I've used the same CPA firm for almost 20 years. I don't use a CPA because I run a big business or have a lot of money, I use a CPA because like you, I sometimes have tough tax questions. And for what it's worth, I'm not talking about a seasonal "tax preparer" with a booth in K-Mart, I mean a real CPA.
 

There are times that it pays to get an expert on the task. I could send you to various web sites where you could muddle around finding different answers but you've probably already done that.
 

If you'll ask around in your region you'll discover a small business that houses a couple of CPAs who have some experience with veterans finances and you'll learn PDQ that their fee is well worth it. I know I've avoided a lot of traps by having a pro take care of it.
 

CPAs usually charge by the amount of work they put into your tax returns and if you're like me without a ton of income, debt or cash flow, you may find the service to be a real bargain. And your questions will be reliably answered by a pro.
 

Good luck!

 

Tax Exemptions?

Question:


Do we get any tax exemptions.

 

Jim's Reply:


Sure...veterans get a lot of exemptions. Your disability pay is tax free for starters.
 

The amount and type of other exemptions will depend a lot on which state you live in. Some states offer tax free home purchases and most states will scale the amount of property taxes by the disability rating a vet has.
 

Shopping at the PX and commissary are tax free and can save you a lot of money. The best way to learn about the tax benefits in your state will be to head to your state's web site and explore. Good luck.

 

Homeowner Tax?

Question:

If granted TDIU, will I still pay house taxes?

 

Jim's Reply:

Maybe. Maybe not. That's up to the state you're in. Some states will allow a 100% P & T veteran to skip paying taxes on the mortgage (and auto registration and a lot more) and other states aren't quite as generous but there are still significant benefits.
 

To learn what your state can do for you, use the Google search engine to look for your state veterans affairs department and you'll find all that info in there. Good luck!

 

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Combat-Injured Veterans Tax Fairness Act

The Combat-Injured Veterans Tax Fairness Act of 2016 is a law that may allow many combat-injured veterans to claim a refund or credit from the IRS.

Debts

Question:

I'm 100% service-connected. If I purchase vs lease a car; will the IRS or any creditors be able to make me sell my asset, to satisfy any outstanding taxes, if the purchase is made with VA. disability pay?

 

Jim's Reply:

Your question is much more complex than you realize. In a nutshell, VA disability pay can not be garnished to pay for debt.

But VA disability pay may be clawed back if you owe federal debt (IRS, student loans) and it may be apportioned if you owe child support or alimony. 

So far as any automotive purchases or leases or rentals go, your method of payment won't have anything to do with any financial transaction in the future. If you fall behind on payments, the vehicle may be repoed no matter how you've paid for it.

I don't know that anyone can make you sell existing assets to pay taxes. That's a new one on me and you'd have to consult a tax lawyer to be sure but that doesn't sound realistic. Otherwise, make the best deal you can, keep timely with payments and you won't have any problems.

 

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IRS Debt: Options for Low-Income Taxpayers

What to do if the IRS sends you a notice saying you owe them money.
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Where to get free help if you owe a tax debt to the IRS

Where to get free help.
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Don't Leave Money on the Table: Tax Credits and Public Benefits

Are you getting all of the tax credits and benefits you qualify for? Use our checklist to find out.