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RI Veterans: Did you know? 10 February 22 – John A. Cianci

by John A Cianci, Department Veterans Service Officer, Itlalian American War Veterans (ITAM)

Did you know you could take up to $600 ($300 single, $600 married) deduction for cash charitable donations to a veteran organization or other IRS approved charitable organization you made in 2021, even if you took the standard deduction in 2021?

To be clear, technically, you won’t get a tax deduction for your qualified charitable donation to charity. But at the same time, you aren’t required to pay taxes on the distribution, and it isn’t counted towards your AGI. This could help keep other income streams in lower tax brackets or potentially even reduce your Medicare premiums and taxation of your Social Security benefits.

Where do you enter your cash donation to charity? Line 12 (a) on 1040 if you are taking standard deduction, https://www.irs.gov/pub/irs-pdf/f1040.pdf. 

VETTIP – Ensure you keep your proof of the donation. Proof could be check, copy of gofund.me electronic receipt, thank you letter, etc. Reach out to the organization you made the contribution to in 2021 for a letter or receipt if you don’t have back up documentation.

Is it worth taking?

Yes, the average taxpayer will save additional $20 for every $100 donation he or she made in 2021.

VETTIP – Taking the $600 charitable donation will net my wife and I an extra $150 tax refund for 2021 taxes.

This tax deduction was only for 2021, if you took the standard deduction, and is not expected to be renewed.

Simply put, 90% of all Americans use the standard deduction and have been unable to take the IRA approved charitable deduction, which includes most veteran organizations. Moreover, many taxpayers donated to many causes last year like the Kentucky Veteran Relief Fund, or for events sponsored by the Italian American War Veterans at the Rhode Island Veterans Home.

Take the time and reap the small financial benefit for your act of kindness in 2021.

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Did you know the state of Rhode Island’s ranks 47th of Best Places to Live for Military Retirees?  https://wallethub.com/edu/best-states-for-military-retirees/3915

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Governor’s Budget Proposal to exempt military retired pay benefits both State of Rhode Island and Veterans; Veterans schedule Rally at the RI State House – TODAY  

Governor McKee’s budget proposal includes a plan to phase in exempting military retired pay over a five-year plan, and starting on or after January 1, 2027, military retired pension will be 100% tax exempt. 

The plan starts on January 1, 2023, when a taxpayer can subtract 20% from adjusted gross income of the taxpayer’s military service pension.

Each year after, an additional 20%, when beginning on or after January 1, 2027, a taxpayer may subtract from adjusted gross income up to 100% of the taxpayer’s military service pension benefit from his or her federal adjusted gross income.

25 States currently exempt military retired pay now. Neighboring states, Connecticut. Massachusetts, and New Hampshire all exempt military retirement from state income taxes.

In 2015 the state of Connecticut , despite facing a budget shortfall, found room in the budget to get rid of its income tax on military retirement pay, joining 14 other states that do not tax pensions.

In Maryland in 2015, newly elected Maryland Republican Governor Larry Hogan roared into office this year ready to cut taxes, including exempting all military pensions from the state’s income tax. Despite a budget deficit and having to compromise with a Democratic legislature, he succeeded in doubling the exemption to $10,000 in annual income.

Maryland and Connecticut are part of a growing competition among states wanting to attract and keep military retirees, who are some of the best-educated, best-trained, and youngest retirees around. Active military members are generally eligible for retirement after 20 years of service. The majority then get civilian jobs, turning their military training into skills for the private sector. As a result, they pay income taxes, sales taxes on everything they buy, and possibly business taxes, boosting the economies of the states they live in.

Most veterans have lived in many places. Plenty of websites—with titles like Best Places for Military Retirees—can help them weigh the fiscal pros and cons of where they choose to live. While decisions on where to live might not be based only on tax rates, they’re a factor—and states know it.

Sadly, Rhode Island ranks 47 out of 51 Best Places for Military Retirees. Bordering states –  Connecticut ranks 22, Massachusetts ranks 28, and New Hampshire ranks 10. The overall rank is based on economic environment, quality of life, and health care rank 22 and 28.

One would assume exempting military pensions would result in a decrease in tax revenue to Rhode Island.

However, RINEWSTODAY,com analysis of four military retires, David and Dora Hellner, Kasim Yarn, and John Cianci resulted in the State of Rhode Island gaining tax revenue if the military retirees do not relocate and other military retirees are attracted to the state as a result of state income tax being tax exempt. 

Our results show just sales tax revenue on items purchased by all four of the military retirees off-sets the reduced state income tax.

The analysis did not include other revenue that would be lost if the military retirees relocated after retiring from the military; thousands of dollars of state income tax paid on other income earned, sales tax paid by the veteran, registration taxes, and license fees.

For example, let’s  review Director Kasim , Office of Veterans Services, who is a state employee, and retired as an officer from the US Navy in 2016 . According to the public state website, Yarn earns an estimated $132,000. Immediately after retiring, he started working for the State of Rhode Island, with taxable income the State of Rhode Island would receive hundreds of dollars of state income tax on.

His Navy retirement is estimated to be $58,000, according to his rank and years in service before retiring.

If Yarn or another officer retires with a similar military pension, he or she would be obligated to pay an estimated $27,115 in federal income tax.

What would the McKee’s budget proposal save Yarn, just as one example, or a similar military retiree?

Since the State of Rhode Island state income tax piggybacks off the federal income tax, Yarn would be obligated to pay 5.9% state income tax on the $27,115 federal tax obligation, which nets the State of Rhode Island an estimated $1,624.

With the Governor’s budget proposal exempting military pensions, Yarn’s tax obligation would be lower since the tax rate would be reduced to 4.75% netting the State of Rhode an estimated $713. 

Tax revenue to the State of Rhode Island would be reduced $910.

Looking at Veterans of Foreign Wars State Commander Dora Vasquez-Hellner, retired US Army First Sergeant, and husband, David Hellner, relocated to Rhode Island in 2000.

“We relocated because my husband secured a job working for the U.S. Navy in Newport Rhode Island,” said Dora.

For the last 11 years, both have paid annual state income taxes on their military pensions. Hellner’s joint retirement and current earnings are like the income for the previous example and passage to phase in military exemption would net them an approximate annual saving of $1,000.

Both scenarios’ loss of tax revenue from state exempting income tax would be offset from an estimated $3,360 in sales tax the state would receive. A research study estimates someone who earns an annual income of over $100,000 will spend an estimated $4000 a month. More than likely, most of this spending is at local businesses.

One more example is a retired Rhode Island Guard member, Master Sergeant Cianci (that’s me). Cianci retired in 2004 after serving 22 years in the U.S. Army, mostly serving on active and part time duty with the Rhode Island National Guard.

The Ciancis have a projected estimated $87,000 taxable adjusted gross income. They would take the standard deduction resulting in an estimated federal tax liability estimated to be $8,593.

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Without the military exemption, the Cianci’s are expected to pay estimated State of Rhode Island income tax of $515.

If the military pension was exempt, Cianci’s state income tax will be reduced to $412 dollars – a savings of $103.

The Cianci’s spend over $3000 a month at restaurants, coffee shops, gas stations, and shopping stores, etc. which generate an estimated $210 a month in state sales tax, annually that’s $2510.

Simply put, just in projected sales tax revenue generated by all the scenarios above, exempting military pension, the state generates a positive tax stream from each of the military retirees listed above from one other tax source, sales tax, alone.

Additionally, military retirees require less state and local services. Most military retirees have grown children, which is less of a burden on local school systems.

Military retirees have health care for life, and many are eligible and using the VA, which lessens the burden on local hospitals. Recall the Providence VA Medical facility service during the pandemic, which included providing vaccine shots not only for veterans, but also for their spouses, in many cases.

Other tangible and intangible factors of having a veteran collecting military pension living in the state are:

·      Military retirees continue their service by volunteering in organizations and community

·      Military retirees have homes, and certain skill sets and talents which attract employers.

·      Military retirees tend to be in their forties, and will continue to work for many years, income that will be taxable

When the Hellners relocated to Rhode Island in 2010,  Dora returned to further her education by attending a state university that was 100% paid for by federal benefits, which she earned while serving her country. “Both my husband and I served our country for over 20 years. Our service included stateside and overseas, requiring many sacrifices for our family, which included relocation several times due to duty assignments , ” said Dora .”Since retiring and relocating, we continue to serve by volunteering in our community and numerous veteran organizations.”

Volunteering is another benefit as most military retirees are involved with non-profits and serve on community boards and leadership.

“Veterans are the fabric of many veteran organizations serving our veterans, “ said Eric Wallin, Executive Director, Operation Stand Down Rhode Island. ”I can’t imagine without support of veterans, how the organizations that serve veterans, would be.”

Exempting military pensions not only appears to generate additional tax revenue, but it should also assist Rhode Island to sustain and increase the number of veterans who live here, which has declined by 10,000 in the ten-year period, 2010-2020.

If the trend of losing veterans living in the state continues, it will result in less VA services being offered at the Providence Medical Center. Less services are intertwined with less federal jobs.

Several years ago, the State of Florida committed almost ten million dollars to actively recruit military members who were retiring to counter the state’s losses of veterans, which were intertwined again with the population of World War II veterans. If Florida’s veteran population continues to decline, it would impact the number of VA facilities and personnel needed to service those veterans. Simply put, job losses.

Another benefit exempting military retired pay from taxes is losing highly trained and skilled workers retiring from the military and remaining in the workforce.

Again, the Hellners are an example. Both have continued to work after retiring from the military. “My husband and I chose to relocate in 2000 after both of us retired in 2000 because my husband was hired by the Department of Navy for a position in Newport RI, “ said Dora.” Our military retirement is paid for by the federal government, not the state or local government.” In Dave’s case, the Navy had a skilled position; and he was qualified almost immediately after retiring.

“Both my husband and I served our country for over 20 years. Our service included stateside and overseas, requiring many sacrifices for our family, which included relocation several times due to duty assignments, ” said Dora . ”Since retiring and relocating, we continue to serve by volunteering in our community and numerous veteran organizations.”

It’s important to know how your state taxes military retirement pay, but that is just one of many factors to consider when deciding where to retire.

Governor McKee’s budget proposal to exempt military pension from state income tax is a step in the right direction to make the State of Rhode Island more competitive for recruiting and retaining military retirees.

McKee’s budget proposal recognizes the service of a group of military retirees who served and sacrificed years of their life serving in the military, and who continue to serve in his or her community.

For sure, exemption of military pensions will improve the state’s ranking from 47 on the Best Places to Live for Military Places. Additionally, this would align the state with bordering states of  Connecticut and Massachusetts, who already exempt military pensions.

Exempting military pension is a small price to pay for those who have defended our freedom. Moreover, RINEWSTODAY.com analysis shows the loss of state income tax will be offset by the state sales tax the military retirees spend at local businesses.

In closing –

“Permit me Sir to add, that Policy alone in our Present Circumstances, seem to demand that every Satisfaction which can reasonably be requested, should be given to those Veteran Troops who, in the recent Conflict, have been so long and so faithfully serving the States . . .”

General George Washington to Governor Jonathan Trumbull of Connecticut, June 28th, 1781

EVENTS

TODAY – February 10, 2022, Thursday. Veterans Rally at the State House. The VFW has organized a rally at the state house for veterans, active duty, and supporters to show support to the House Finance Committee meeting which is considering the Governor Dan McKee budget proposal to phase in exempting military retired pay. (See today’s story in RINewsToday from Operation Stand Down RI, too)

The rally will be in the Rotunda of the State House at 3:00pm and a host of speakers will be on the agenda, to include Governor Dan McKee, Senator Walter Feleg, Representative Samuel Azzinaro, and key leaders in the RI veteran’s community.

RESOURCES

AARP offers a free career center for veterans, http://campaigns-aarp-org-stage.targetclose.com/veteran-job-center . The center offers a free course, Veterans Career Advantage,  job search tool for companies seeking veteran employees, link to access what a good resume looks like, and other tips for veterans seeking employment. 

DISCOUNTS

Restaurants

Applebee’s – Military Discount … With more than 2,000 locations, Applebee’s is a family grill restaurant. Applebee’s gives 10% off for active duty and veteran. Last verified 07/31/2028

Denny’s – Hartford Ave, Johnston offers 10% discount for veterans and active duty . Denny’s is a table service diner-style restaurant chain.  Last verified 07/31/2028 (PS I had breakfast there on Saturday).

Outback Steakhouse – 10% Discount to active and veterans. Last verified 07/28/2021

99 Restaurant & Pub – The 99 Restaurant & Pub offers a 10% military discount to members of Veterans Advantage. Available at select locations only. Bring valid military ID

Retailers

Advance Auto Parts – 10% for Active Duty, Veterans, and families. Last verified 07/28/2021

Bass Pro Shops –  Offers a 5% discount to active-duty military, reservists, and National Guard. Sign up and verify your status online or bring your military ID when you shop at your nearest Bass Pro store (source).

BJs Wholesale – Reduced membership fee. BJ’s offers all military personnel over 25% off their Membership. Last verified 07/28/2021

Lowes – Enroll in the Lowe’s Military Discount Program to activate your 10% discount

“Our way of saying Thank You” to our active duty, retired and military veterans and their spouses with a 10% discount on eligible items.

Verification of your military status is fast and easy through our partner, ID.me.

ID.me is our trusted technology partner in helping to keep your personal information safe.

GameStop – is offering a 10% in-store military discount on all pre-owned products, collectibles, and select new products. Available to current and former military members who bring any valid proof of service or when they verify through ID.me

Home Depot – Offers a 10% off military discount on regularly priced merchandise for in-store purchases for active duty, retired military, and reservists at participating locations. Customers are required to show a valid government-issued military ID card to redeem this offer.

Kohls – 15% discount offers for active military, veterans, retirees, and their immediate family members a 15% discount on purchases made on Mondays, in store only. In order to receive the military discount, eligible customers must present proper identification along with any tender type.

Jiffy Lube – HONORING VETERANS ALL DAY EVERY DAY!

We didn’t want to wait for Veteran’s Day to express our appreciation and gratitude for your service. That’s why every Team Car Care owned and operated Jiffy Lube® service center is offering our BEST discount of 15% OFF as a “Thank You” to the men and women of our Armed Forces for their service to our country. *Disclaimer*- I.D. required. No coupon is required. Excludes batteries and brakes, alignment, and diagnostic services. Available only at select locations listed below:

Tioque Ave, Coventry RI

Bald Hill Road, Warwick RI

Park Ave, Cranston RI

Michaels – offers a 15% off military discount on the entire in-store purchase including sale items for active duty, retired military, guard, reservists, veterans, and family members. How to get –

1.    Create an Account. Log in or create a Michaels Rewards account.

2.    Get Verified. Provide your military information to get verified instantly.

3.    Go Shopping! To use your discount online and in store, just sign into your account or provide your Michaels Rewards phone number at checkout.

O’Reilly Auto Parts – 10% discount on in store items for Active Duty, Veterans and families. Last verified 3/4/21.

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If you are a retailer and or a veteran aware of a business not listed above, please forward , itamri4vets@gmail.com:  the business’s name , location, and military and veteran discount offered.

If you have an event, meeting, other pertinent veteran information, or email questions or help needed, contact the Italian American War Veteran Service Officer, John A Cianci, itamri4vets@gmail.com, ITAM Office 1-(401)677-9VET(9838)

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To read all columns in this series go to: https://rinewstoday.com/john-a-cianci/

John A. Cianci is a Veteran Service Officer. Retired, U.S. Army MSgt., Persian Gulf War and Iraq War combat theater.

Cianci, a combat disabled Veteran, served in Desert Shield/Storm and Operation Iraqi Freedom. His awards include Bronze Star, Combat Action Badge, Good Conduct, and others.

Cianci belongs to numerous veterans organizations – Italian American War Veterans, American Legion, Veterans of Foreign War, United Veterans Council of Rhode Island, and many more organizations. He is an active volunteer assisting veterans to navigate federal and state benefits they have earned. He is Department of Rhode Island Department Commander Italian American War Veterans and Veteran Service Officer.

He is a graduate of Roger Williams University (BS Finance), UCONN business school* (Entrepreneur Bootcamp For Veterans), Solar Energy International Residential, Commercial and Battery Based Photovoltaic Systems certificate programs, numerous certificates from the Department of Defense renewable energy programs, including graduate of the Solar Ready Vets Program.