Episode 122: Wondering how to manage your finances when you’re serving in the military? In this episode, we’re talking about military tax tips and military money management tips.
On this episode, we’re talking to Scott Vance of the Sheepdog Financial podcast. Scott is a fee-only financial planner focusing on military members and is sharing information on managing personal finances for military service members.
About Scott Vance
Scott enlisted in the army right out of high school, completed his college education, and was commissioned as an officer. He retired from the army a few years ago and now focuses on financial planning and tax services.
Scott has always been great at putting money away, but not so good at leaving them to gain compound interest.
The traditional military retirement system was putting in 20 years, then getting half your salary for the rest of your life. Now, if you do 20 years, you get 40% of your salary. In both plans, you’d get a higher percentage for additional years above and beyond 20. If you retire before 20 years, there’s generally no pension.
About the Thrift Savings Plan
The Thrift Savings Plan is a contribution set up that’s similar to a 401k. This is ideal for improving returns upon retirement and extremely helpful for those who don’t reach 20 years of service before retirement. Keep in mind, the reasons for retiring before 20 years vary. Injuries are a factor, family dynamics, etc.
With the Thrift Savings Plan, 1% of your salary is contributed in the first year, then the military matches any contributions you make yourself.
Tax Breaks for Military Families
Many people in the service are unaware of the tax breaks that they’re eligible for, especially the state-specific breaks.
The Military Spouse Residency Relief Act
The Military Spouse Residency Relief Act (MSRRA) is meant to protect the interests of a military spouse who moves as a result of the services. The MSRRA allows the spouse to retain their residency for tax and voting purposes.
Not only does the MSRRA simplify state taxes, but it also allows military spouses from tax-free states to retain those rights if they’ve accompanied their spouse elsewhere.
If you’re in the military and haven’t taken advantage of the MSRRA, you can claim back as far as three years.
Renting a Home
If you’ve rented out your home to someone else as a result of deployment, you can track your expenses as though you’re a business. It falls under investment properties, and understanding that there are extra taxes and tax breaks to consider.
If you have to rent a home as a result of your posting, looking into VA loans and VA rental options available in your area.
How Trisuli Financial Advising Can Help
Scott operates Trisuli Financial Advising. Scott uses his expertise to help service members with personal finance, working within the jargon, knowing the tax loopholes, and planning for life beyond the service.