Killeen Tax Planning

Planning Around Military Careers

Military families plan around deployments, moves and retirement. BOMCAS does tax planning for Killeen clients remotely.

Statewide strategies appear on the Texas tax planning page, while this page is about military careers in Killeen.

Thrift Savings Plan

Soldiers in the Blended Retirement System get matching TSP contributions. Roth TSP contributions made from tax-free combat pay are never taxed, and their earnings are tax free too once the distribution is qualified, generally five years after the first Roth contribution and age 59½, which makes Roth contributions during a deployment especially valuable. Traditional contributions from tax-exempt combat pay do not count toward the normal elective deferral limit, only toward the higher annual additions limit, while Roth contributions from combat pay still count toward the normal limit. Earnings on traditional tax-exempt contributions are taxed when withdrawn.

Savings Deposit Program

Soldiers deployed in combat zones can deposit up to $10,000 in the Savings Deposit Program, earning 10 percent annual interest. The interest is taxable.

Keep the House or Sell It

Soldiers who receive orders must decide whether to sell or rent their Killeen home. Renting builds equity and income, but the house becomes a business. The suspension of the five-year test can preserve the home sale exclusion, and depreciation taken while it was rented is taxed at sale.

Military Retirement

Soldiers approaching retirement should plan the timing of separation, the Survivor Benefit Plan election, VA disability claims and whether to take a lump sum under the Blended Retirement System. Texas has no income tax, so retirees who settle in Killeen avoid state tax on retired pay.

Disabled Veterans and Property Tax

Texas fully exempts the homestead of veterans rated 100 percent disabled or unemployable by the VA. Veterans with lower ratings receive partial exemptions of $5,000 to $12,000 of value. Surviving spouses may keep the exemption. Applications are filed with the Bell County appraisal district, known as Bell CAD.

Spouse Careers

Spouses who move with each assignment can plan around self-employment, retirement accounts that travel with them and state residence choices.

Education Benefits

GI Bill and other VA education benefits are not taxable. Soldiers who transfer GI Bill benefits to children must commit to more service. Families should coordinate GI Bill use with 529 savings and education credits, since expenses paid with tax-free benefits cannot be claimed for credits.

Buying With a VA Loan

Many soldiers buy homes in Killeen with VA loans. Mortgage interest and property tax deductions only help those who itemise, which many do not. The decision to buy should focus on how long the family will stay and whether the home will make a good rental later.

Second Careers

Retirees who take civil service jobs may be able to combine military service with civilian service for their FERS pension by making a deposit, but then give up military retired pay for that period unless certain exceptions apply. The choice affects lifetime income and should be calculated before deciding. Retirees who start businesses can shelter business income in a solo 401(k) or SEP while drawing retired pay.

Estate Planning

Military families should keep beneficiary designations current on life insurance, the TSP and retirement accounts. Texas has no estate tax, and most estates are well below the federal exemption, so planning focuses on guardianship, wills and avoiding probate for property in several states.

Choosing a Tax Residence

Legal domicile and military home of record are different. Soldiers can establish Texas domicile with genuine ties, and married couples also have the SCRA tax-residence election described above. Updating a payroll form alone does not change domicile.

Our Process

Review returns, LES and goals.
Project income and tax.
Compare options.
Recommend steps.
Check in before moves and year-end.