Family & Transition + Taxes

1) Survivor Benefit Plan (SBP)

• Purpose: Provides a monthly annuity to your beneficiary after you die, based on a covered base amount you elect at retirement.
• Premiums: Deducted from retired pay. Cost and coverage level depend on your elected base amount and beneficiary category (spouse, child, spouse & child, former spouse).
• Election: Must be made at retirement (with spouse concurrence when required). Late changes are restricted and only allowed under specific open enrollment or life‑event rules.
• Offset/interaction: SBP is separate from VA Dependency and Indemnity Compensation (DIC). (Note: earlier SBP‑DIC offset was eliminated—verify current rules if receiving DIC.)
• Compare options: Evaluate SBP vs commercial life insurance for coverage needs, health underwriting, inflation protection (COLAs), and survivor lifetime risk.

Action steps: Pull your SBP fact sheet, run a needs analysis, and document spouse concurrence (if applicable) before final out.

2) Spouse Employment & MyCAA

• MyCAA: Scholarship for eligible spouses (generally E‑1–E‑6, W‑1–W‑2, O‑1–O‑2) to pursue licenses/credentials/associates in portable careers.
• MySECO: One‑on‑one career coaching, resume help, and job search tools via Military OneSource.
• PCS support: Many states offer license transfer or expedited licensing for military spouses—check your state labor agency.
• Child care & employment link: If waitlisted on base, use fee assistance to access community care so spouse can work or train.

3) Child Care & Fee Assistance

• On‑base first: Create a household profile and request care via MilitaryChildCare.com; keep preferences updated.
• Fee assistance: If waitlisted, Child Care Aware® of America administers DoD fee assistance for approved community providers by service branch.
• Documentation: Eligibility often requires orders, LES, employment/education verification for spouses, and provider enrollment.
• Back‑up care: Some installations offer short‑term care options; ask your CDC or Family Services center.

4) Transition Assistance (TAP) & SkillBridge

• TAP: Mandatory pre‑separation curriculum covering VA benefits, employment, and personal finance; typically begins 12–18 months before separation (or 24 months for retirement).
• Tracks: Employment, Vocational, Higher Education, and Entrepreneurship tracks available; choose based on your goals.
• SkillBridge: Up to the final 180 days in civilian industry training/ internship with command approval; you remain on active duty pay/benefits.
• Coordination: Get written training plan, host agreement, and command approvals; start early—slots fill up fast.

1) Combat Zone Tax Exclusion (CZTE)

• Who qualifies: Enlisted and warrant officers exclude all taxable pay for qualifying months; commissioned officers exclude up to a monthly cap (based on the Sergeant Major/ Master Chief of the Army/Navy basic pay plus hostile fire/imminent danger pay—verify current cap each year).
• Qualifying months: Any day present in a designated combat zone generally qualifies the entire month for exclusion.
• What’s covered: Basic pay and certain special pays/bonuses earned during qualifying service; BAH/BAS are already non‑taxable.
• Documentation: CZTE is usually reported via your payroll commands; keep orders/LES for records and state tax filing.

2) State Residency & MSRRA (for spouses)

• SCRA for SMs: Servicemembers may retain their state of legal residence for tax purposes while stationed elsewhere.
• MSRRA for spouses: Allows qualifying spouses to elect the same domicile as the servicemember or maintain their own, if conditions are met (e.g., presence in the state due to orders).
• Filing impact: Choice of domicile can affect state income tax, vehicle registration, and voting—confirm rules with your state revenue agency.
• Records: Maintain proof of domicile (driver’s license, voter registration, LES), and orders to justify filing choices.

3) Free Filing & Help

• MilTax: Military OneSource offers no‑cost e‑filing software and access to trained tax consultants familiar with military rules.
• VITA: Many installations host Volunteer Income Tax Assistance centers during filing season.
• Extensions: Deployed to a combat zone? You may receive automatic deadline extensions—see IRS Pub 3 for details.

4) More Military Tax Basics

• PCS moving expenses: Unreimbursed active‑duty PCS moving expenses can still be deductible—keep orders and receipts.
• Non‑taxable allowances: BAH and BAS are not subject to federal income tax; some state tax rules may differ.
• TSP & taxes: Traditional TSP contributions reduce current taxable income; Roth TSP grows tax‑free if qualified. CZTE months may allow tax‑free Roth contributions of tax‑exempt pay (check rules).
• State returns: If claiming MSRRA or out‑of‑state domicile, ensure your W‑2 state codes and LES match your filing position.