From: Sent: Subject:
Halsey-Munroe, Patricia Tuesday, February 03, 2004 2:30 PM POW Notice #05-04: MLCP Tax Program for 2003 Tax Returns
MLCP 2004 Tax Program for Filing 2003 Income Tax Returns & Income Tax Information For Military Members & Families
Provided by the Legal Assistance Branch, MLCPAC (ll) Bldg. 54C, Coast Guard Island Alameda, California 94501 (510) 437-2762 (Tax Services)
Free, Electronic Filing on Coast Guard Island for Tax Year 2003: The Legal Assistance Branch, MLCPAC (ll) will provide free, electronic filing in conjunction with the IRS VITA tax services starting February 15, 2004. If a VITA Volunteer prepares your return, that volunteer will may give MLCPAC (ll) your return on disk to e-file for you. Ask your volunteer preparer about this service. Other Free, Electronic Filing and Tax Preparation Services: At many of their larger offices, the IRS offers free electronic filing (e-filing) and free, form preparation 6 days a week. To determine which services are offered at your local IRS office, call 1 (800) 829-1040. In Northern California, both form preparation and electronic filing are offered at the following IRS offices: Oakland; Sacramento; Santa Rosa; Chico; Redding; Walnut Creek; and San Francisco. The IRS has partnered with various private industry companies to bring taxpayers affordable, convenient, user-friendly, e-file options available from home or through an Authorized IRS E-file Provider. Some companies offer FREE electronic filing services on-line for active duty, military taxpayers. For a list of these electronic filing services, check the IRS website at www.irs.gov . One electronic filing service is offering free filing to military families -- see
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Many military installations also offer FREE tax services, and you may want to call the military installation closest to you to determine the nature and extent of their services, including the availability of e-file. Electronic filing is not to be confused with the “refund” program offered by commercial tax services where the taxpayer gets a so called “refund” the “same day” or a couple of days after having the tax return prepared and electronically filed with the IRS. These same-day refunds are not refunds at all but are, in fact, loans. These loans often have interest rates of nearly 300% per annum. It rarely makes sense for a taxpayer to pay a high interest rate to get an immediate refund when an electronically filed refund can be received in 4 to 7 days. VITA Volunteers Assist with Tax Form Preparation: Any Coast Guard member or spouse who has questions or problems completing a 2003 income tax return should contact their local Volunteer Income Tax Assistance (VITA) volunteer, who is IRS-trained to prepare income tax forms. The VITA volunteers have charts showing which forms to file, and they can assist with preparation of the 1040EZ form and the 1040A form. Some VITA volunteers may have more experience and can provided assistance with the 1040 form. For a referral to you local VITA volunteer, please call the telephone number noted above and request a faxed copy of the VITA Tax Volunteer list. The list of tax volunteers is also located on SWS III at Outlook, “All CGIsland” under “Tax Notes.” Legal Assistance Attorneys Assist with Complex Federal and State Tax Forms: By appointment, MLCPAC Legal Assistance Attorneys will assist with preparation of complex federal and state income tax returns. Civilian spouses who work in California and who must file a California income tax return are encouraged to schedule an appointment for assistance with preparation of their California tax return. These services are most in demand at the end of March, and you are encouraged to call in March to guarantee availability of this service. Also these legal assistance services are available only to clients with a military identification card and who are eligible for legal assistance services under 10 USC 1044a.
Note for California 540NR Returns: Due to the Dec 2003 changes in the federal law under the new Servicemembers Civil Relief Act (SCRA) at 50 USC Appendix Sec 571 (d) -- it is recommended that California Non-Resident Income Tax Returns (540NR) not be prepared until after March 1. This will give the state of California time to enact appropriate legislation conforming to the requirements of the federal law and will change the requirements for the form. Questions/Forms/Websites: Taxpayers can call the IRS 24 hours a day, 7 days a week for answers to federal income tax questions and to order federal income tax forms. The IRS’s telephone number is 1 (800) 829-1040. Federal income tax forms, publications and instruction booklets are also available on the IRS website at . Most state tax authorities also maintain an Internet website where the taxpayer can obtain state income tax forms and instructions. Taxpayers can access the state websites from links on the IRS website. Look for “fillable” forms and send the form often when preparing. Many federal and California income tax forms are also available in building 54C. Earned Income Credit: More military families rate the Earned Income Credit (EIC) for their income taxes due to new IRS rules in 2002. Certain entitlements, e.g BAH, subsistence, and combat pay are no longer included in the AGI for the EIC. For more information see the IRS publication at http://www.irs.gov/. Combat Zone Tax Filing Extensions: Taxpayers who are serving in a combat zone on the tax-filing deadline are automatically granted an extension to file their federal taxes until 180 days after they leave the zone (not 180 days after they return). Additional extension time may be provided based on the period of time the taxpayer was in the combat zone. Legal assistance can provide you with the procedure for filing late under the terms of this automatic extension. NOTE: Some states may require a separate request for an extension while others honor the automatic federal extension. Contact legal assistance to understand your state’s requirements. Expansion Of Combat Zone Filing Rules To Contingency Operations: The extensions discussed directly above now apply to those who are deployed outside the United States away from their permanent duty station, and participating in an operation designated by the Secretary of Defense as a contingency operation. Contact legal assistance to see if this section applies to you. Military Family Tax Relief Act (MFTRA): The following information was provided by CDR George F. Reilly, JAGC, USN, and is reprinted with his consent: 1. Capital Gains Relief for Sale of a Principal Residence: a. Normally, an individual taxpayer can exclude up to $250,000 ($500,000 if married filing a joint return) of gain realized on the sale of a principal residence if they owned and used the residence as a principal residence for at least two of the five years ending on the date of sale. Under the MFTRA, a service member may elect to suspend for a maximum of ten years the five-year period for ownership and use during certain absences due to their military service. This change is retroactive and applies to sales after 6 May 1997. Taxpayers have a one-year period (beginning on 11 November 2003) to claim refunds as a result of this provision. What does this really mean? The bottom line is that any military taxpayer who sold a former principal residence since 6 May 1997 (the enactment date of the Taxpayer Relief Act of 1997) may, I repeat, MAY be entitled to a tax refund.
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Taxation of Death Gratuity and Increase in Amount Payable: The MFTRA increases the amount of the death gratuity payable for deaths occurring on active duty from the current $6000 to $12,000. This provision is retroactive to deaths occurring from 11 September 2001 forward. Since the tax was already paid by some of the affected families, they will also have to seek a refund from the IRS. “Above-the-Line Deduction” for National Guard and Reserve Members for Guard/Reserve
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Travel Expenses: Under prior law, Guard and Reserve members could only claim itemized deductions for their non-reimbursable expenses for transportation, meals, and lodging when they must travel away from home (and stay overnight) to attend meetings or drills. The MFTRA provides what is called an “above-the-line deduction” for the overnight transportation, meals, and lodging expenses of National Guard and Reserve members who must travel away from home more than 100 miles (and stay overnight) to attend Guard and Reserve meetings and drills. This means that they can deduct these expenses from gross income whether or not they itemize their deductions. This only applies to expenses not exceeding the local per diem rate and is only for travel 100 miles or more from home. This provision is retroactive to expenses on or after 1 January 2003. Note: THIS INFORMATIONAL PAPER IS INTENDED ONLY FOR GENERAL INFORMATION REGARDING INCOME TAXES. YOU SHOULD CONTACT A LEGAL ASSISTANCE ATTORNEY FOR ALL SPECIFIC QUESTIONS.