2022 AFBA Financial Planning Guide

15-8. TAX TIPS

If you itemize your deductions on Schedule A, the following items may be deductible: a. Unreimbursed purchase and maintenance costs of Battle Dress and Utility uniforms provided you are not allowed to wear them when you are off duty. b. Unreimbursed costs of rank and other articles which do not replace regular clothing (e.g., insignia, swords, etc.). c. Professional Dues — Dues paid to professional societies (e.g., American Society of Electrical Engineers). d. Unreimbursed room and board costs while in TDY status. e. Transportation costs of 56 cents per mile incurred while traveling from your duty station to a part-time job location. You may not claim this deduction if you return home before going to the part-time job location.

Miscellaneous Deductions

Sell investments that have fallen in value and give the proceeds to a bona fide charity. Both the cash donation and the investment loss are deductible on your tax return.

Charitable Gifts

There are several types of retirement and education savings accounts. Establishing these accounts allow you to save money for a specific purpose while deferring or eliminating the taxes on the investment earnings.

Retirement and Education Accounts

The threshold on the deductibility of medical bills dictates that, to the extent possible, medical bills should be consolidated within a given tax year. Consequently, it may be advantageous to either move up or postpone out-of-pocket medical costs to a specific calendar year.

Medical Bills

If you get a tax refund, you have in effect given “Uncle Sam” an interest free loan. On the other hand, if you underpay your taxes you may be subject to a tax penalty. Consequently, it is important to have the correct amount of taxes withheld from your pay each year. The IRS has a withholding allowance calculator at www.irs.gov .

Withholdings

Flexible Spending Accounts (FSA) are a benefit offered by some employers. A certain amount is withheld pretax then eligible out-of-pocket medical and dependent care expenses are reimbursed. Under current tax rules, any balances in these accounts are forfeited at the end of the tax year. The bottom line is you should manage your medical expenses to ensure that FSA balances are used up by the end of the year.

Flexible Spending Accounts

CHAPTER 15: FEDERAL & STATE TAXES

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