Cadet Income Taxes

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Ddm66

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Wondering if its typical for a 4th yr cadet to take the Standard deduction or itemize ?

The cadets are given free access to a tax preparation software and apparently it is recommending taking the standard deduction.

I haven’t had a chance to look at the numbers yet but wanted check here to see what the norm is.

I’m assuming the income their W-9s show is before deductions for uniforms etc.
 
I may be missing something, but I cannot imagine a scenario where a Cadet/MIDN would itemize unless it involved investment money somehow.

They wouldn't have mortgages to deduct. Their health expenses are covered. They only make around 14k, so itemizable expenses shouldn't be close to the std amount.
 
It would have to be a very unique situation for a cadet to have more itemized deductions than the $12,950 standard deduction for single filers. 99.9% of cadets will have a very simple 1040 form and use the standard deduction. State rules will vary, but I’d bet most state filings will be similar.

Stealth_81
 
The uniforms and other items they have to purchase because they are mandatory are deductions The question is does the w-9 reflects a gross income prior to those deductions and if it does, would those deductions be greater than the standard deduction.
 
Another resource are the parents clubs, especially if you have state specific questions. My DD uses her home address in TX; I think most Cadets do but some may use their USAFA address....

I'm going to add this as a topic for our parent club general meeting this coming Sunday!
 
You don’t need to worry about uniforms etc.

Unless your state allows an additional deduction for that (PA comes to mind).
 
Ddm66 said:
The uniforms and other items they have to purchase because they are mandatory are deductions The question is does the w-9 reflects a gross income prior to those deductions and if it does, would those deductions be greater than the standard deduction.
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I don't think uniforms are deductible for federal taxes. Some states may allow those deductions (@A1Janitor mentioned PA), but since I don't believe it is a federal deduction, it would not be worthwhile to itemize.
 
I had forgotten how much the standard deduction is so just based off that alone, for 99.9% of the cadets, the correct choice would be to take the standard deduction and not itemize.
 
Most tax prep software will have the taxpayer enter any amounts that can be listed as itemized deductions on Schedule A of the 1040, if they desire. Once everything has been entered, the software will recommend proceeding with the option that yields the greatest overall deduction.
 
Ddm66 said:
The uniforms and other items they have to purchase because they are mandatory are deductions The question is does the w-9 reflects a gross income prior to those deductions and if it does, would those deductions be greater than the standard deduction.
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Just want to clarify. Cadets receive W2s meaning they take federal and state income taxes are taken out. BAS(given for break periods) is not taxable, and so essentially all cadets will receive the same base pay in any given year. For C4Cs the question becomes whether it is more advantageous for parents to claim as a dependent if they are able to, but I personally have never seen a tax situation with my peers where itemizing makes sense. Most cadets will probably receive a refund/break even with standard deduction.
 
Clar said:
Just want to clarify. Cadets receive W2s meaning they take federal and state income taxes are taken out. BAS(given for break periods) is not taxable, and so essentially all cadets will receive the same base pay in any given year. For C4Cs the question becomes whether it is more advantageous for parents to claim as a dependent if they are able to, but I personally have never seen a tax situation with my peers where itemizing makes sense. Most cadets will probably receive a refund/break even with standard deduction.
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For clarification, parents only have the option of declaring the cadet/mid a dependent if the cadet/mid lived at home for more than 1/2 the year. So only C4C's can be considered (you can split a lot of hairs regarding when Basic/Plebe summer started) if they were your dependent or not. Preppies and prior enlisted don't have this option - they are independent.

Cadets/Mids are typically briefed on filing tax returns and their status as a dependent or not for the first few months they are at the academy.

I think they 'earn' $1185 per month in taxable wages, which for six months is less than $7200 gross on the Box 1 of the W2. They would essentially have to be 'trust fund babies' to even considering itemizing vs the standard deduction. (All the 'allowances' they receive for food and such never appear on the W2 - great for tax purposes, not so good when realize that money is not factored into retirement calculations)

TurboTax (and probably other tax software companies) make their product available for free to military members. The most difficult thing cadets/mids need to sort out when using this product is selecting what rank to select for the 'free' version. Historically, Turbo Tax has not provided 'Cadet/Mid' as a recognized rank in their system. Pick O-1 or E-1 - their is no intent to deceive, the company simply isn't sophisticated enough to include 'Cadet' as an option.

If you do claim your C4C on your tax return for 2022 - Make certain your cadet/mid knows you did it. This would generate a 'Red Flag' at the IRS for someone to be claimed on 2 separate returns for the same period.

As a general rule, you aren't paying tuition, food, books, medical costs (though you might still be carrying them on your medical insurance plan), etc - cut them loose and leave them off your return.

Some organizations will offer mids/cadets 'deals' to prepare their tax return. It should take the typical cadet about 20 minutes to do their own return.
 
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In order to itemize these days, you probably have to have a mortgage and pay property taxes. There are other scenarios where someone could itemize, but since the standard deduction is 12K for an individual, not sure how a cadet is going to wind up with more than 12K in deductions

From your friendly neighborhood CPA
 
With efiling now, the “red flag” is gone. Once a social security is claimed on a return, it can’t be claimed again.
 
A1Janitor said:
With efiling now, the “red flag” is gone. Once a social security is claimed on a return, it can’t be claimed again.
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not exactly true. There are many times with divorced parents when the wrong parent takes the child. You are correct that both cant efile and take the child. However, the other parent can paper file the return which will then have the IRS deal with who is entitled to the dependent
 
Humey said:
not exactly true. There are many times with divorced parents when the wrong parent takes the child. You are correct that both cant efile and take the child. However, the other parent can paper file the return which will then have the IRS deal with who is entitled to the dependent
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Generally, the parent that gets their W2 first efiles and screws the other parent. You are correct- they could efile or send papers returns- though I suspect most efile.

I am required to efile client returns - so I wrote the post from my perspective.

I have dealt with this nightmare about ten times in my life. Perhaps the worst thing that a CPA can see is a rejection of the efile because someone else claimed the kid improperly. Doctor records, school records, report cards, divorce agreements all come in to play. Time consuming and unbillable hours.

The last one was my bozo brother in law who checked the wrong box when he efiled my nephews return. It took 6over 6 months to amend my nephew’s return.
 
A1Janitor said:
Generally, the parent that gets their W2 first efiles and screws the other parent. You are correct- they could efile or send papers returns- though I suspect most efile.

I am required to efile client returns - so I wrote the post from my perspective.

I have dealt with this nightmare about ten times in my life. Perhaps the worst thing that a CPA can see is a rejection of the efile because someone else claimed the kid improperly. Doctor records, school records, report cards, divorce agreements all come in to play. Time consuming and unbillable hours.

The last one was my bozo brother in law who checked the wrong box when he efiled my nephews return. It took 6over 6 months to amend my nephew’s return.
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yes, i am also required to e-file my client's returns. However, there is always an out
 
Humey said:
yes, i am also required to e-file my client's returns. However, there is always an out
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LOL - it is also my experience that the ones intentionally doing this run to H & R Block. Mailing returns could take over a month to process, defeating the stolen dependent goal.

The saddest case I saw was in 2021. A man took the kid from his estranged girlfriend. Didn’t work or need to file a return, had 4 other dependents. Refused to let me amend return for free. Cost her substantially. Cost his own child substantially.
 
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