Preparation key during tax season
Stars and Stripes March 23, 2008
A little preparation can go a long way to avoid having your tax return rejected — or, even worse, audited.
So as the April 15 deadline approaches and you’re looking for a little help, tax officials in the Pacific are urging people to have their paperwork and records in order when they head to a base tax center.
Showing up with a folder full of receipts and hoping for the best will probably only end up costing you more heartache.
“A lot of people have the attitude of, ‘I just want to wash my hands of this,’” said Staff Sgt. Veronica Logan, noncommissioned officer in charge at Yokota Air Base’s tax center. “You can’t always just depend on the tax person’s experience, you need to know about your own finances.”
With appointments at many tax centers already booked well into April, the last thing anyone wants is to forget something, have their return rejected and have to do the whole process all over again.
“We can only put into a return what people give us,” said Capt. Paul Gesl, officer in charge of Yokota’s tax center.
Gesl said people sometimes hesitate to report certain income on their taxes, such as a small amount listed on a single 1099 form.
“Bring everything you have, because the Internal Revenue Service already has a copy,” he said.
Going through last year’s return and bringing it to the center when you go to file is a good way to help ensure you have your paperwork straight, Gesl said. That also makes it easier for the person preparing your return.
It’s also important to bring your bank account information and routing numbers, as well as the Social Security numbers and birthdates for all family members listed on your return, he said.
People also should know what their state tax laws are, he said.
Some states give tax breaks to servicemembers stationed overseas.
Gesl said some people who come in to file are surprised to find that state income taxes have been incorrectly withheld from their paychecks all year.
Another detail that can get overlooked is making sure your married name is on record with the Social Security office, Logan said.
“A lot of married female servicemembers have only changed their name with military records, and not with Social Security,” she said.
When that happens, the return is rejected and the servicemember will have to refile using her maiden name.
For personnel who have a job off base, such as teaching English, Gesl said it is important to include that income on your tax return.
“The Japanese actually have a version of the W-2 form,” he said, explaining that you will have to convert the amount of foreign currency earned into dollars based on the previous year’s average exchange rate. That rate is available at any base tax center, he said.
In addition, Gesl said the employer’s address must be translated into English so it can be entered onto the return.
There’s also a catch for individuals who send their children to off-base day care and wish to claim the expenses on their taxes, he said.
Because most of those off-base providers do not have an identification number registered with the U.S. government, individuals must write a letter explaining the situation and why the provider has no federal identification number, Gesl said. The letter must be filed with a paper return, so people listing this claim cannot file electronically.
Gesl and Logan said the most commonly asked question among their customers this year is about the economic stimulus package rebate.
Gesl said individuals must file a tax return to receive the rebate, which will be sent separately from the tax refund.
He added it can take a little longer than expected to receive your refund.
“The IRS says two to three weeks, but be prepared for it to take longer, especially as we get closer to the 15th,” he said.
What’s new for this year’s tax lawsStandard deduction and rates
For people who don’t itemize, the standard deduction amount has increased for 2007 to adjust for inflation. According to the Internal Revenue Service, the amount you can deduct depends on your filing status and whether anyone else can claim an exemption for you.
While the 2007 tax rates did not change, tax brackets were widened due to inflation. This means that a larger portion of many people’s income will be taxed at a lower rate.
Earned income tax credit
The amount of earnings you can claim and still be eligible for the earned income tax credit has increased for 2007.
According to the IRS Web site, the minimum earned income amount used to figure the additional child tax credit has increased to $11,750. That affects individuals who earned less than $37,783 ($39,783 for married, filing jointly) with two or more qualified children; $33,241 ($35,241 for married, filing jointly) with qualifying child; and $12,590 ($14,590 for married, filing jointly) for individuals with no children.
Standard mileage rates
The deduction for operating your car for business, medical and move-related uses has increased.
The standard mileage rate for business is now 48.5 cents a mile, while the rate for operating your vehicle to get medical care or to move has increased to 20 cents a mile.
Foreign income exclusion
Now being adjusted annually, the foreign income tax exclusion, which affects foreign money earned abroad, has increased for 2007 from $82,400 to $85,700.
For more information about the tax law changes, consult your tax center or visit the IRS Web site at www.irs.gov.
— Bryce Dubee
Combat pay not taxable
According to the IRS, if you served in a combat zone or hazardous duty area during 2007, the pay you received while deployed may be eligible for a combat zone exclusion.
“The month for which you receive the pay must be a month in which you either served in a combat zone or were hospitalized as a result of wounds, disease, or injury incurred while serving in the combat zone,” the IRS Web site states, adding that your combat pay should be automatically excluded from the rest of your income on your W-2 form.
Types of pay that are excluded include active-duty pay, imminent danger or hostile fire pay and re-enlistment bonuses as long as the voluntary extension or re-enlistment took place while you were in the combat zone.
— Bryce Dubee
List of combat zones
Combat zones are designated by an executive order from the president as areas in which the U.S. armed forces are engaging or have engaged in combat. There are currently three such combat zones (including the airspace above each):
¶ Arabian Peninsula areas, beginning Jan. 17, 1991 — the Persian Gulf, Red Sea, Gulf of Oman, the part of the Arabian Sea north of 10º North latitude and west of 68º East longitude, the Gulf of Aden, and the countries of Bahrain, Iraq, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.
¶ Kosovo area, beginning March 24, 1999 — Federal Republic of Yugoslavia (Serbia and Montenegro), Albania, the Adriatic Sea and the Ionian Sea north of the 39th Parallel.
¶ Afghanistan, beginning Sept. 19, 2001.
Public Law 104-117 designates three parts of the former Yugoslavia as a Qualified Hazardous Duty Area, to be treated as if it were a combat zone, beginning Nov. 21, 1995 — Bosnia and Herzegovina, Croatia and Macedonia.
In addition, the Department of Defense has certified these locations for combat zone tax benefits due to their direct support of military operations, beginning on the listed dates:
In support of Operation Enduring Freedom (Afghanistan combat zone):
¶ Pakistan, Tajikistan and Jordan — Sept. 19, 2001.
¶ Incirlik Air Base, Turkey — Sept. 21, 2001 through Dec. 31, 2005.
¶ Kyrgyzstan and Uzbekistan — Oct. 1, 2001.
¶ Philippines (only troops with orders referencing Operation Enduring Freedom) — Jan. 9, 2002.
¶ Yemen — April 10, 2002.
¶ Djibouti — July 1, 2002.
¶ Somalia — Jan. 1, 2004.
In support of Operation Iraqi Freedom (Arabian Peninsula Areas combat zone):
¶ Turkey — Jan. 1, 2003 through Dec. 31, 2005.
¶ Israel — Jan. 1 through July 31, 2003.
¶ The Mediterranean Sea east of 30º East longitude — March 19 through July 31, 2003.
¶ Jordan — March 19, 2003.
¶ Egypt — March 19 through April 20, 2003
For federal income tax purposes, qualified hazardous duty areas are treated as combat zones.