Tax Benefits for Military Members

Did you know May is National Military Appreciation Month? The IRS wants military members and their families to know about the many tax benefits available to them. Tax benefits for service members include:

Partly or fully tax-free combat pay.

You can exclude certain pay from your income if you are a member of the U.S. Armed Forces who serves:

  1. in a combat zone as designated by the President in an executive order;
  2. a qualified hazardous duty area designated by Congress while receiving hostile fire pay or imminent danger pay; or
  3. an area outside the combat zone or qualified hazardous duty area when DOD certifies that such service is in direct support of military operations in a combat zone or qualified hazardous duty area, and the member receives hostile fire pay or imminent danger pay.

Unreimbursed travel & moving expenses.

Reservists whose reserve-related duties take them more than 100 miles from home can deduct their unreimbursed travel expenses on Form 2106 or Form 2106-EZ, even if they don’t itemize their deductions.

For those on active duty who have to move because of a permanent change of station, eligible unreimbursed moving expenses are deductible on Form 3903. In other cases, they need to meet certain time and distance tests.

Earned Income Tax Credit.

Low-and moderate-income service members often qualify for such family-friendly tax benefits as the Earned Income Tax Credit (EITC), and a special computation method is available for those who receive combat pay.

Extensions to pay or file.

Service members stationed abroad have extra time, until June 15, to file a federal income tax return. Those serving in a combat zone have even longer, typically until 180 days after they leave the combat zone.

Military members may qualify to delay payment of income tax due before or during their period of service by up to 180 days.

For questions or help requesting extensions or special limitations for service members, please feel free to contact us.

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