Military taxes when you need to maintain two households

Hi everyone! If I get deployed in the military and my family has to maintain two households, does that change anything tax-wise? Are there any exemptions or reductions for that situation that I should know about?

Absolutely, there are indeed several tax benefits and exemptions available for members of the U.S. military services. When you maintain a separate household while your family stays in another, the Servicemembers Civil Relief Act (SCRA) provides certain financial protections. For instance, the SCRA may allow you to maintain your legal residence in one state even if the military orders you to another state. This could be beneficial if your home state has lower taxes or no state income tax.

Moreover, allowances like Basic Allowance for Housing (BAH), Overseas Housing Allowance (OHA), and Family Separation Allowance (FSA) can be beneficial. These allowances are typically non-taxable because they are considered compensation for expenses, not part of a servicemember's income.

Also, there are potential deductions you can explore. The Moving Expenses for Members of the Armed Forces allows some active-duty members to deduct moving expenses, including maintaining a separate household, due to moving nearer to their work location in the United States.

Additionally, the Tax Cuts and Jobs Act provides for non-taxable reimbursement by an employer for moving expenses incurred due to a start of work at a new principal place of work. While the provision generally applies only to moves within the U.S., the new law retains the exclusion for reimbursements of military members' moving expenses.

Remember, each individual’s situation is unique, and I would strongly recommend consulting with a knowledgeable tax preparer or an authorized military tax assistance program to ensure the correct application of these rules to your specific circumstances.