Returns for Box Elder Households
A typical Box Elder household may include an active-duty member, a spouse working locally or remotely, children, a house bought recently and perhaps a rental property near a previous base. South Dakota has no income tax, but federal rules for military pay and other states' rules for residents can still apply. BOMCAS prepares personal returns for Box Elder families remotely and can keep working with them after a move.
For the statewide picture on residency and federal returns, read personal tax preparation in South Dakota; this page focuses on military pay, spouses, veterans and former homes.
Military Pay
Basic pay is taxable, while housing and subsistence allowances are not. Pay earned while serving in a combat zone or qualified hazardous duty area is excluded from income, with a monthly cap for officers, and the excluded pay can still be counted for the earned income credit if that helps. Service members in a combat zone also receive automatic extensions for filing and payment.
Spouses and Legal Residence
Federal law allows a military spouse to keep their own state of legal residence or to elect the service member's, even if they have never lived there. A spouse who elects South Dakota pays no state income tax on wages earned here, while one who keeps a residence in a state with an income tax may owe that state tax. Spouses working remotely for an employer in another state should check how that state treats them.
Guard, Reserve and Civilians
Members of the National Guard and reserves who travel more than 100 miles from home for drills can deduct unreimbursed travel costs. Civilian employees at the base and defence contractors are taxed like other workers; those who relocated for the job should keep records of their move, because moving expenses are generally deductible only for active-duty military on a permanent change of station.
Veterans and Retirees
VA disability compensation is tax-free. Military retired pay is taxable federally, and when a retiree has a VA disability rating, part of retired pay may be waived in exchange for tax-free disability pay. Combat-related special compensation is also tax-free. We check that the 1099-R matches the actual taxable amount.
Homeowners and Former Homes
New homeowners in Box Elder can deduct mortgage interest and property taxes if they itemise. Many families also own a house at an earlier duty station. If you rent it out, the income goes on Schedule E. Military members can suspend the five-year test for the home sale exclusion for up to ten years while on qualified extended duty, which can protect the exclusion when the house is sold later.
What to Bring
- W-2s, including the military W-2 from myPay.
- LES statements for combat zone months.
- 1099-R and VA letters for retirees.
- Mortgage and property tax statements.
- Rental records for any former home.
- Last year's federal and state returns.
Child Care and Dependants
With both parents working or one deployed, many Box Elder families pay for child care at the base child development centre or in town. The child and dependent care credit and a dependent care flexible spending account can both reduce tax, but the same expenses cannot be used twice. Families with children in the Douglas School District who pay for summer day camps can usually count those costs, while overnight camps do not qualify.
Staying After Retirement
Many airmen who retire from Ellsworth stay in Box Elder or nearby. Retired pay, a civilian salary and later Social Security are all free of state income tax here, but the federal return becomes more complex. Withholding on retired pay should be reviewed when a second income starts, so there is no surprise balance in April.
Box Elder Personal Tax Preparation Questions
Is my housing allowance taxable?
No. Basic allowance for housing and basic allowance for subsistence are not taxable.
Can my spouse use South Dakota as their state of residence?
Federal law lets a military spouse elect the service member's state of legal residence, so if yours is South Dakota, your spouse may be able to use it.
I rented out my house at my last base. Can I still use the home sale exclusion?
Possibly. Military members on qualified extended duty can suspend the five-year test for up to ten years.
Is VA disability pay taxable?
No. VA disability compensation is tax-free.
Talk to BOMCAS About Personal Tax Preparation in Box Elder
Family business owners need the business return and clean books first. Paying a nanny goes through payroll, selling crafts or baked goods brings sales tax, a PCS decision is a planning question, missed years after a deployment belong in late filing, and a spouse from abroad should see cross-border tax. If you also have work in other parts of the state, our South Dakota pages on business returns, sales and use tax, bookkeeping, payroll, tax planning, late filing and cross-border tax sit under the state overview.
Tell BOMCAS about your Box Elder business or household and we will reply with next steps and what we need for a quote. Use the contact page or the form below, call 780-667-5250 or email info@bomcas.ca. All Box Elder services are on the Box Elder overview. This page is general information, not advice for your situation.