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Whether you’re military or civilian, you need to spend less than you earn, accumulate money in your emergency fund, and invest for your retirement. You should also take out insurance to protect your property and loved ones.

But there are many specific things about personal finance that relate specifically to being a military service member, partner, or spouse that don’t apply to others. For example, most people don’t have to move frequently, and they don’t have access to things like housing and college allowances or tax-exempt forms of compensation.

That’s why we’ve put together this personal finance guide for military members and their families. By following our guide, you can learn more about resources that can help you with specific issues, like deciding where to live, getting the most out of your insurance benefits, and saving for retirement.

Key points to remember

  • Military service members and their families face unique financial challenges and have access to help for them.
  • A travel allowance is based on your rank and family status.
  • The temporary accommodation allowance reimburses you for temporary accommodation and meals during a move.
  • The military will pay to move your household goods, including your vehicle if you are moving outside of the continental United States.
  • The IRS publishes an Armed Forces Tax Guide that covers all tax situations related to military service.

Moving costs

Moving is an important part of military life, and orders (called permanent station change) mean packing up all your things, finding a new place to live, and transporting everything there, usually just when you start to feel settled. . your current location. Although the military contributes to most moving expenses, you should still manage things carefully to limit or avoid out-of-pocket costs.

You’ll usually have to pay for some things yourself if you’re lower in rank or end up with a lower move allowance, which the military provides to help offset moving costs. Some of these additional costs include:

  • Clothes for a new climate
  • Moving costs for your pet
  • Costs associated with lost or broken goods

Homeowners or moving insurance can cover the last item on the list, although getting reimbursed can be a challenge. On the other hand, some members report winning by accepting a reimbursement of 95% of what the government move would have cost, then doing the work themselves.

Some costs are covered by the military, which we list below.

  • Travel allowance: Your rank and family status determine the amount of travel allowance you receive. The stipend ranges from $1,067.17 for an E-1 with no dependents to $5,349.82 for an O-7 and up with dependents for fiscal year 2022.
  • Temporary accommodation costs: This temporary living allowance reimburses you for five or 10 days of temporary accommodation and meals while you move within the continental United States. Up to 10 days upon departure and up to 60 days upon arrival are covered when moving outside the continental United States
  • Moving household goods: The military pays you to move a certain weight of goods, which depends on your rank and dependent status.
  • Per diem: Service members receive a maximum per diem of $155 for meals and lodging while moving in 2022 within the continental United States. An additional daily allowance is provided for each dependent: 75% for children aged 12 and over and 50% of the rate for children under 12 years old.
  • Vehicles: The military reimburses you per mile if you drive during your move. If you are shipping your vehicle to the continental United States, the charges are your responsibility. For moves outside of the continental United States, the military pays to ship a personal vehicle, subject to size limits.

It’s up to you to manage the specifics of car and home insurance when you move.

Insurance

The military has your health and dental insurance covered by TRICARE and its active duty dental plan, so you won’t have to worry about those when you leave the state as civilians often do. But if you own a home or a vehicle, you have to deal with some insurance issues.

Auto insurance rates vary widely from state to state, so you might find yourself paying much higher (or lower) premiums after a move. If you are deployed and no one will be driving your vehicle, you may be able to save money by dropping your auto liability insurance if your state allows it. You may want to keep your full coverage in case your vehicle is damaged or stolen while you’re away.

If your home is unoccupied for a long time or you plan to rent it out, you may need to change your home insurance policy. You should also be aware of the personal property coverage provided by your insurance and your movers for your belongings during a move and during a deployment.

35%

The percentage of military spouses in 2020 who were unemployed but wanted to work.

Spouse employment

Frequent moves can be a major challenge for military spouses who want and need to work, especially when it comes to career advancement. According to Blue Star Families, up to 35% of active duty military spouses who responded to a 2020 survey said they were unemployed but wanted or needed to work.

The high cost of child care prevents many military spouses from working, as does the unpredictability of the military’s schedule. In some cases, couples end up living apart to allow the service member and their partner to work.

Being injured or disabled during combat can also be a factor. In fact, intense care responsibilities can make it difficult for military partners to work and advance in their careers.

Saving for retirement can be a challenge for spouses who cannot work or are underemployed. Couples may want to establish an Individual Spousal Retirement Account (IRA). This tax-efficient IRA allows the active duty member to contribute up to $6,000 in 2021 and 2022 to a Traditional or Roth IRA in their spouse’s name. The IRS allows taxpayers to set aside an additional $1,000 catch-up contribution each year if they are 50 or older.

Taxes

Working in more than one state or country can make tax filing more complicated for civilians. But frequent moves, deployments, and special types of pay, such as combat pay, make things even more complex for service members. The Department of Defense offers a free military-specific online tax preparation and e-filing software called MilTax, available through your Military OneSource account.

As a member of the service, the state to which you pay income taxes depends on your established domicile. The Internal Revenue Service (IRS) defines domicile as “the permanent legal domicile that you intend to use for an indefinite or indefinite period of time, and to which, if absent, you intend to return. It’s not always where you currently live.

The state to which you owe income taxes is also the state in which you can:

  • Register your vehicle
  • Have a driver’s license
  • Register to vote

Some states do not have income tax or do not tax military pay. Military.com has a full list of domains that fit the bill. Military spouses may be able to claim the same domicile as their military spouse under the Assisted Military Spouse Residence Act, but in some cases they may have to pay taxes from the state where they currently live.

Serving in the US military can create so many bespoke tax situations that the IRS devotes an entire publication to them. Publication 3, Armed Forces Tax Guide covers topics specific to the military, such as types of non-taxable compensation. It also covers general issues, such as information on the Child Tax Credit, the Earned Income Tax Credit (EITC) and the deductibility of moving expenses, but it aims to include all the information that the most military service members will need to know in one publication. .

The essential

As a military service member or spouse, you will face personal financial difficulties related to frequent and compulsory moves, from moving expenses to difficulties with spousal employment and child care, insurance and taxes. If you arm yourself with the knowledge beforehand, you’ll learn more about how to limit hardship and achieve financial success by taking full advantage of all the salaries and benefits you’re entitled to, from basic training to retirement.