CPA Jamie Block of the New York State Society of CPA’s discussed tax breaks that all veterans can take advantage of Monday during News 8 at Sunrise.
“I’d like to focus on some tax credits, educational benefits and some state and property tax exemptions for veterans that they can receive due to their service in the U-S Air Force, Army, Marines, Navy or Coast Guard,” said Block.
She started by explaining an important tax credit available to veterans. “Many disabled veterans are eligible for the ‘Earned Income Tax Credit,’ or EITC, which is a refundable federal income tax credit that you can file on your return, for low-to-moderate income individuals and their families. This credit is usually used to reduce the amount of payroll taxes, while at the same time, encouraging individuals who might receive benefits or public assistance, to seek employment, such as veterans. Military members may be especially interested in the credit, because combat pay is not included in a service member’s income, which will help keep them under that income threshold.”
There are benefits available for veterans who are injured in combat as well. “Thanks to the Combat-Injured Veterans Tax Fairness Act — which was enacted December in 2016, but wasn’t in effect until 2017 — veterans who suffered combat injuries and are separated from the military, aren’t taxed on their lump sum disability benefits, or severance payments that they may receive. For vets who receive lump sum benefits after January 17, 1991, they’re allowed additional time to claim a credit and refund on those taxes that they may have had in the past.”
Block said there’s help for veterans who want to go to college. “The Post 9/11 G-I Bill is an education benefit for service members and veterans, who served in active duty after September 10, 2001. They’re eligible to collect, if they served 90 days on active duty after September 10, 2001, or were honorably discharged from active duty for a service-related disability and served at least 30 days continuously after September 10, 2001. This bill is not taxable, and does not need to be declared as part of their income. It’s a fantastic benefit.”
In terms of how the benefits can be utilized by veterans, Block said, “You can receive a percentage of tuition and fee-payment that’s paid directly to the school on their behalf, a monthly housing allowance, books or supplies stipend up to $1,000. The Post 9/11 G-I Bill can be used at colleges, universities, trade schools, on-the-job training apprenticeships, and even flight school.”
When it comes to property taxes, Block said New York offers a partial tax exemption for certain New York veterans. Eligible veterans are those who bought their home with eligible funds (meaning money from insurance, a pension, or bonus), veterans who received expeditionary medals, and veterans who served during the Cold War. Higher exemptions are available for veterans who served in combat and/or are disabled. This exemption is available for a home owned by the veteran and is also available for a surviving spouse who has not remarried.
Veterans and other military members have access to VA home loans which are more beneficial in comparison to home loans offered to civilians. Some features include no down payment, no private mortgage insurance, and no early repayment penalties.
Block concluded, “If you are a veteran, I suggest you check out the U.S. Department of Veteran Affairs website to check and see what resources could be most beneficial to you.”
And for more information from the New York State Society of CPA’s, visit nysscpa.org/getmoneysmart.