Five Things You Need to Know: Tax Season

Follow These Tips to Help Successfully Navigate Tax Season

Tax time can be a stressful and confusing time. With credits, deductions, itemizing, returns and a federal tax code spanning more than 70 thousand pages, it can be a daunting task for any Sailor to navigate. Follow these helpful hints to ensure your tax season goes smoothly.

Information compiled from the Internal Revenue Service website.
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1. Volunteer Income Tax Assistance (VITA) Centers
There are two types of Navy Tax Assistance Centers (TACs). The first type is operated by Naval Legal Service Command (NLSC) and administered by JAG Corps personnel. The second type of sites are called "fleet sites," which operate independently of the JAG Corps at shipboard or remote sites and are run by fleet commands or support centers.

For tax year 2013, NLSC sites will completely transition to the self-service model. This allows customers to prepare their own returns using free, online programs on TAC computers with assistance from trained volunteers. Full-service VITA services, where volunteers specifically prepare individual returns, will no longer be offered at NLSC-operated sites. Fleet sites may choose to offer self-service tax assistance, run a full-service VITA site, or provide a combination of both.

You can find your local Tax Assistance Center by clicking here.

2. Same-Sex Marriage
This year is the first time same-sex partners will be eligible to file joint federal returns. Some states may also allow joint filing. The U.S. Department of Treasury has announced that same-sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married for federal tax purposes, regardless of whether the couple lives in a jurisdiction that recognizes same-sex marriage. This means legally-married same-sex couples must file their 2013 federal income tax return using either the "married filing jointly" or "married filing separately" filing status. For state returns, the rules and requirements will vary by state. For guidance on filing state returns, the State Tax Guide can be used as a reference. The updated version for tax year 2013 will be available in February and posted here.

3. Predatory Lending
Beware of Refund Anticipation Loans! Short-term loans are not covered by the same laws governing most loans. This means lenders can charge anywhere from 50 to more than 700 percent! Plus, if you get a smaller return than you anticipated, you still have to pay back the initial amount you were loaned, along with your interest! Some common examples of these loans are "use your loan as a down payment" sales at auto dealerships, rent-to-own electronics and furniture stores, and "cash-in-hand" tax filing centers.

4. Deferral of Tax Payment
If you are a member of the Armed Forces, you may qualify to defer payment of income tax that becomes due before or during your military service. To qualify, you must be performing military service, and notify the Internal Revenue Service that your ability to pay the income tax has been materially affected by your military service. You will then be allowed up to 180 days after termination or release from military service to pay the tax. If you pay the tax in full by the end of the deferral period, you will not be charged interest or penalty for that period.

5. Tax Tips for Newlyweds
Social Security Information: It is important the names and the Social Security Numbers that you place on your tax return exactly match the Social Security Administration's (SSA) records. The SSA updates the IRS database every 10 - 15 days. Therefore, report a name change to your SSA as soon as possible for all changes to be made prior to tax season. To do so, file form SS-5, Application for a Social Security Card. Additionally, notify your employer and all of your financial institutions of your name change. This will ensure that your information at tax time is reported to you correctly.

Changes in Withholdings: If you and your spouse are both employed, you may want to estimate and review your Federal and State payroll withholdings. Your combined incomes may move you to a higher tax bracket. Use the IRS Withholding Calculator tool at the IRS.gov website to help you complete a new W-4.

Change in Filing Status: If you are married as of Dec 31, you are considered married for tax purposes for the entire calendar/tax year. You may choose to file a Married Filing Joint return, which is generally the most beneficial, or you can file a Married Filing Separately return. You may want to calculate your taxes both ways to determine which is most advantageous for your family.

Change in Standard or Itemized Deductions: If you did not qualify to itemize deductions before you were married, that may have changed. You and your spouse may save money by itemizing rather than taking the standard deduction on your tax return. You will need to use tax return form 1040 when filing and complete a "Schedule A" that details the itemized deductions.

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