Cadets and Taxes

USMAZoo98

USMAZoo98

Member
Joined
Jul 30, 2020
Messages
559
Does anyone know if the Academy (any of them actually) provides support to the cadets to prepare and submit their taxes? I assume they are required to do so now. I recall long ago when I was a cadet that they had tax prep assistants set up in Ike Hall for cadets to visit and submit their taxes when they had free time to go do it. I'm particularly interested since I do not believe we can claim our cadet as a dependent any longer.
 
USMAZoo98 said:
Does anyone know if the Academy (any of them actually) provides support to the cadets to prepare and submit their taxes? I assume they are required to do so now. I recall long ago when I was a cadet that they had tax prep assistants set up in Ike Hall for cadets to visit and submit their taxes when they had free time to go do it. I'm particularly interested since I do not believe we can claim our cadet as a dependent any longer.
Click to expand...
I have not heard of any Tax prep. assistance from the Academies. Note that in most case a Cadet or Midshipman's taxes should be relatively simple. Some tax software providers and other organizations offer free tax services for Active Military personnel. See this article from USAA for more information.
 
Also note a cadet may be claimed as dependents. It is up to the cadet and parents.

I know this isn’t a popular opinion by the military. But as a CPA, an IRS agent assigned to tax professionals told me they can.

The support worksheets base the decision on the amount the cadet pays vs parents. Free education or room and board is not considered in the worksheet as it isn’t paid by either the parent or cadet.

Not looking for arguments from anyone that the cadet should do it because they think it is right whether legal or not (my son claimed himself). As a preparer, I let the client decide.

I would accept the IRS agent’s word.
 
A1Janitor said:
Also note a cadet may be claimed as dependents. It is up to the cadet and parents.

I know this isn’t a popular opinion by the military. But as a CPA, an IRS agent assigned to tax professionals told me they can.

The support worksheets base the decision on the amount the cadet pays vs parents. Free education or room and board is not considered in the worksheet as it isn’t paid by either the parent or cadet.

Not looking for arguments from anyone that the cadet should do it because they think it is right whether legal or not (my son claimed himself). As a preparer, I let the client decide.

I would accept the IRS agent’s word.
Click to expand...
At least the first year can be dependents for sure
 
USMAZoo98 said:
Does anyone know if the Academy (any of them actually) provides support to the cadets to prepare and submit their taxes? I assume they are required to do so now. I recall long ago when I was a cadet that they had tax prep assistants set up in Ike Hall for cadets to visit and submit their taxes when they had free time to go do it. I'm particularly interested since I do not believe we can claim our cadet as a dependent any longer.
Click to expand...
No idea where but my cadet said she received help at WP - and she described something similar to what you refer to. I don't recall if she got that help last year, but I believe she said it was in place the previous year. I'm not giving out tax advice as to you claiming your cadet as a dependent - that is between you and your tax advisor/preparer.
 
Capt MJ said:
I think I have heard USNA mids mention the availability of this during tax prep season:


www.militaryonesource.mil

Volunteer Income Tax Assistance (VITA) | Military OneSource

Military members, including retirees, are eligible for free tax consultation and preparation at Volunteer Income Tax Assistance (VITA) program locations.
www.militaryonesource.mil www.militaryonesource.mil
Click to expand...
That is awesome.

I setup and ran a vita program for minorities and low income citizens. Personally did 800 tax returns in the first year.
 
Don't Give Up the Ship said:
...Note that in most case a Cadet or Midshipman's taxes should be relatively simple. ...
Click to expand...

LOL... DS' taxes are more of a pain than mine, thanks to the MIDN Investors Club, or whatever the heck they call it. His 50 million* different brokerage accounts and buying 1 share of this and selling 1 share of that every other week creates lots of paperwork...

*To be honest, it probably isn't quite 50 million accounts, just feels like it.
 
justme said:
LOL... DS' taxes are more of a pain than mine, thanks to the MIDN Investors Club, or whatever the heck they call it. His 50 million* different brokerage accounts and buying 1 share of this and selling 1 share of that every other week creates lots of paperwork...

*To be honest, it probably isn't quite 50 million accounts, just feels like it.
Click to expand...
Exactly.

I have had clients with big bucks, businesses, etc. - the worst return was a relative who was a substitute teacher. 16 different schools with little numbers. His return took me longer.
 
Please be careful taking tax advice on an anonymous forum.

You have to provide over 50% of your child's support for him/her to qualify as a dependent. That meant I wasn't able to include my son, even as a plebe. The big plus for him is that he received a ton of stimulus money that my daughter did not, because I do still list her as a dependent.

Publication 501 (2023), Dependents, Standard Deduction, and Filing Information | Internal Revenue Service

www.irs.gov www.irs.gov

I am not going to get into another annual debate over this. I am just advising that you look at the IRS website and/or talk to a trusted tax professional.
 
brewmeist said:
Please be careful taking tax advice on an anonymous forum.

You have to provide over 50% of your child's support for him/her to qualify as a dependent. That meant I wasn't able to include my son, even as a plebe. The big plus for him is that he received a ton of stimulus money that my daughter did not, because I do still list her as a dependent.

Publication 501 (2023), Dependents, Standard Deduction, and Filing Information | Internal Revenue Service

www.irs.gov www.irs.gov

I am not going to get into another annual debate over this. I am just advising that you look at the IRS website and/or talk to a trusted tax professional.
Click to expand...
And I won’t debate it either. The IRS told me it is allowed in the tax practitioner hotline.

You have to understand the worksheet. It is 50% support between what parent and student pays. The tuition and room and board paid by the government is not considered by the IRS as paid by either.

Talk to your tax professional. Or call the IRS.
 
There are many things to consider for tax purposes.
Consider what to do with the 529 plans. In our case, we decided to give to our Cadets while they are in a lower tax bracket and they used the money to fund IRAs. This put them well ahead of their peers saving for retirement.

Consider state residency. In most cases Cadets will chose their home state. Many states exempt military income from state income tax if the service member is based out of state. If you move while they attend a SA, they don’t have to change residency… but they probably can if it’s more beneficial for tax purposes.

Something for them to consider is post graduation assignments and state residency. For example, a Cadet or Midshipman looking at being based in California will probably want to establish residency someplace during training or keep their home state residency before arriving in CA. This can just involve getting a drivers license in a state where you are based. Military members and their spouses do NOT have to change residency every time they move. It can result in odd situations. Based in one state, driver’s license from another state, address on the driver’s license from a third state. But it can be beneficial for tax purposes.
 
Another factor to consider is auto insurance (and umbrella if you have one)...if your DS or DD was/is on your auto policy...that coverage may not extend if he/she is no longer a dependent living your your home (important to check with your insurance underwriter). USAA said my MIDN needs his own auto policy as he was: a. active duty b. not a dependent c. not living in my house. You don't want to find out coverage doesn't extend after an accident. So consider talking to not only a tax profession but an insurance pro as well.
 
Don't Give Up the Ship said:
Another factor to consider is auto insurance (and umbrella if you have one)...if your DS or DD was/is on your auto policy...that coverage may not extend if he/she is no longer a dependent living your your home (important to check with your insurance underwriter). USAA said my MIDN needs his own auto policy as he was: a. active duty b. not a dependent c. not living in my house. You don't want to find out coverage doesn't extend after an accident. So consider talking to not only a tax profession but an insurance pro as well.
Click to expand...
Some insurance companies don’t understand military, such as having a car registered in one state but insured in another state. We left USAA for insurance some years ago, but then returned as the company we were using didn’t understand this and insisted we register our car in NY and get a NY driver’s license. USAA understands this. Occasionally I’ll get someone there who doesn’t, but I just call back later and get someone who does.
 
UHBlackhawk said:
Some insurance companies don’t understand military, such as having a car registered in one state but insured in another state. We left USAA for insurance some years ago, but then returned as the company we were using didn’t understand this and insisted we register our car in NY and get a NY driver’s license. USAA understands this. Occasionally I’ll get someone there who doesn’t, but I just call back later and get someone who does.
Click to expand...
That's a good point about USAA...they have done a great job for me and our family, including covering a major, six figure, claim with no hassles.
 
UHBlackhawk said:
There are many things to consider for tax purposes.
Consider what to do with the 529 plans. In our case, we decided to give to our Cadets while they are in a lower tax bracket and they used the money to fund IRAs. This put them well ahead of their peers saving for retirement.

Consider state residency. In most cases Cadets will chose their home state. Many states exempt military income from state income tax if the service member is based out of state. If you move while they attend a SA, they don’t have to change residency… but they probably can if it’s more beneficial for tax purposes.

Something for them to consider is post graduation assignments and state residency. For example, a Cadet or Midshipman looking at being based in California will probably want to establish residency someplace during training or keep their home state residency before arriving in CA. This can just involve getting a drivers license in a state where you are based. Military members and their spouses do NOT have to change residency every time they move. It can result in odd situations. Based in one state, driver’s license from another state, address on the driver’s license from a third state. But it can be beneficial for tax purposes.
Click to expand...
DS is a Texas Resident (nominated by Senator Cruz, DL, Voting, his domicile). His car is registered in Texas (no inspection for Active Duty military living out of state in Texas, other military benefits from Texas), his mailing address in Massachusetts. His USAA auto policy has his car "garaged" in Annapolis, MD. He pays zero State income tax and files his own taxes (TurboTax, with occasional questions to relative CPA). I bet he keeps Texas residency...
 
Don't Give Up the Ship said:
DS is a Texas Resident (nominated by Senator Cruz, DL, Voting, his domicile). His car is registered in Texas (no inspection for Active Duty military living out of state in Texas, other military benefits from Texas), his mailing address in Massachusetts. His USAA auto polic has his car "garaged" in Annapolis, MD. He pays zero State income tax and files his own taxes (TurboTax, with occasional questions to relative CPA). I bet he keeps Texas residency...
Click to expand...
Certainly we can all agree Texas is the better residency than the others for taxes.
 
I can’t wrap my heard around, despite anytime else, how anyone could consider their cadet/MIDN financially a dependent. First year? Yes, I see the debate. They lived at home for 6-ish months. On my insurance. Ate my food.

But beyond that? They absolutely do not live at home/financially dependent for even close to 50 pct of the year. My tax lawyer/accountant agrees. This is also his interpretation.

Medical, dental, housing, and a paycheck all from the govt. None of that from mom and dad. Doesn’t make sense at all to me that it could even be twisted into a dependency on parents taxes. So that’s a hard no.

The SA’s could sure make it easy, though and direct the students that they AREN’T dependents. How can anyone ‘in the spirit of the law’ think they are your dependent?

My opinion…consult your one tax/accounting advisor.

PS: Call 3 IRS agents and get 3 different answers. True story.
 
You must log in or register to reply here.
Back
Top