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IRS Tax Tip 2106-43: Military Members Get Free Tax Help

Military Members: Get Free Tax Help

The IRS offers free tax help to members of the military and their families through the Volunteer Income Tax Assistance program. VITA is available both on and off base including sites for military members overseas. Here are five tips to know about free tax help for the military:

1. Armed Forces Tax Council. The Armed Forces Tax Council oversees the military tax programs offered worldwide.

2. Certified Staff. Military VITA certified employees staff their sites. They receive training on military tax issues, like tax benefits for service in a combat zone. They can help you with special extensions of time to file your tax return and to pay your taxes or with special rules that apply to the Earned Income Tax Credit.

3. What to Bring. Take the following records with you to your military VITA site:

  • Valid photo identification.
  • Social Security numbers for you, your spouse and dependents; or individual taxpayer identification numbers (ITINs) or adoption taxpayer identification numbers (ATINs) for those who don’t have Social Security numbers.
  • Birth dates for you, your spouse and dependents.
  • Your wage and earning forms, such as Forms W-2, W-2G, and 1099-R.
  • Interest and dividend statements (Forms 1099).
  • Health coverage information forms such as Form 1095-A, 1095-B or 1095-C.
  • Exemption Certificate Number for exemptions that you obtained through the Marketplace.
  • A copy of your last year’s federal and state tax returns, if available.
  • Routing and account numbers for direct deposit of your tax refund.
  • Total amount you paid for day care and the day care provider’s identifying number. This is usually an Employer Identification Number or Social Security number.
  • Other relevant information about your income and expenses.

4. Joint Returns. If you are married filing a joint return, generally both you and your spouse need to sign. If you both can’t be present to sign the return, you should bring a valid power of attorney form unless you are eligible for an exception. Publication 501, Exemptions, Standard Deduction, and Filing Information, has more details.

5. Health Care Tax Law Help. IRS Free File can help with tax provisions of the health care law. The software will walk you through the lines on the tax forms that relate to the Health Care Law. If your income was $62,000 or less, you qualify for Free File software. If you made more than $62,000, you can use Free File Fillable Forms.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

Additional IRS Resources:

Military Pay Exclusion – Combat Zone Service
Publication 4940, Tax Information for Active Duty Military and Reserve Personnel
Publication 3, Armed Forces’ Tax Guide
Gathering Your Health Coverage Documentation

IRS YouTube Videos:

Military Tax Tips – English | Spanish

IRS Tax Tip 2016-41: Interest Rates

Interest Rates Remain the Same for the Second Quarter of 2016

WASHINGTON – The Internal Revenue Service today announced that interest rates will remain the same for the calendar quarter beginning April 1, 2016. The rates will be:

  • three (3) percent for overpayments [two (2) percent in the case of a corporation];
  • one-half (0.5) percent for the portion of a corporate overpayment exceeding $10,000.
  • three (3) percent for underpayments; and
  • five (5) percent for large corporate underpayments.

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.

Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

The interest rates announced today are computed from the federal short-term rate determined during Jan. 2016 to take effect Feb. 1, 2016, based on daily compounding.

Revenue Ruling 2016-06, announcing the rates of interest, is attached and will appear in Internal Revenue Bulletin 2016-13, dated March 28, 2016.

IRS Tax Tip 2016-33: Facts About Capital Gains and Losses

Capital Gains and Losses – 10 Helpful Facts to Know

When you sell a capital asset, the sale normally results in a capital gain or loss. A capital asset includes most property you own for personal use or own as an investment. Here are 10 facts that you should know about capital gains and losses:

1. Capital Assets. Capital assets include property such as your home or car, as well as investment property, such as stocks and bonds.

2. Gains and Losses. A capital gain or loss is the difference between your basis and the amount you get when you sell an asset. Your basis is usually what you paid for the asset.

3. Net Investment Income Tax. You must include all capital gains in your income and you may be subject to the Net Investment Income Tax if your income is above certain amounts. The rate of this tax is 3.8 percent. For details, visit IRS.gov.

4. Deductible Losses. You can deduct capital losses on the sale of investment property. You cannot deduct losses on the sale of property that you hold for personal use.

5. Limit on Losses. If your capital losses are more than your capital gains, you can deduct the difference as a loss on your tax return. This loss is limited to $3,000 per year, or $1,500 if you are married and file a separate return.

6. Carryover Losses. If your total net capital loss is more than the limit you can deduct, you can carry it over to next year’s tax return.

7. Long and Short Term. Capital gains and losses are treated as either long-term or short-term, depending on how long you held the property. If you held it for one year or less, the gain or loss is short-term.

8. Net Capital Gain. If your long-term gains are more than your long-term losses, the difference between the two is a net long-term capital gain. If your net long-term capital gain is more than your net short-term capital loss, you have a net capital gain.

9. Tax Rate. The tax rate on a net capital gain usually depends on your income. The maximum tax rate on a net capital gain is 20 percent. However, for most taxpayers a zero or 15 percent rate will apply. A 25 or 28 percent tax rate can also apply to certain types of net capital gain.

10. Forms to File. You often will need to file Form 8949, Sales and Other Dispositions of Capital Assets, with your federal tax return to report your gains and losses. You also need to file Schedule D, Capital Gains and Losses, with your tax return.

For more information about this topic, see the Schedule D instructions and Publication 550, Investment Income and Expenses. You can visit IRS.gov to view, download or print any tax product you need right away.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

Additional IRS Resources:

Form 8960, Net Investment Income Tax— Individuals, Estates, and Trusts
Capital Gains and Losses