Unofficial Tax Guide

There is constantly a large portion of American troops on Active Duty status in the United States Armed Forces. There are large number of benefits, rules, and restrictions that apply to how active military personnel can file or pay for their taxes.

One of the most common issues that an active member of the military is faced with is active duty in a combat zone. Being stationed overseas makes it difficult and often times impossible for member of the military to file their tax returns on time. For this reason all active military troops who are performing their service in a combat zone are entitled to a number of tax benefits or exemptions. For active troops to receive the benefits associated with working in a combat zone they must be a member of the Army, Navy, Air Force, Marines, or Coast Guard. According to the (IRS) any other traditional or reserve units that are controlled by the Secretary of Defense are also eligible for combat zone tax benefits.

One of the most popular tax benefits for active military troops in a combat zone is the exclusion of the pay received while in that combat zone. This exclusion means that the military pay for the period of time that a solider is in combat that is not taxable by the IRS. The same income tax exclusion applies for individuals that were injured and hospitalized due to an injury that resulted from combat. Military personnel should verify that their combat pay was excluded from their income taxes, but they generally do not have to do anything else. Each service branch will alter the W-2 forms themselves.

There are certain restrictions that apply to for receiving income exclusion for active duty combat. For instance there is a limit on how much of a military officer’s pay can be to be excluding from their gross earnings; however, the majority of active duty military troops meet the restrictions provided by the IRS. Since the income generated during active combat duty is not taxable it will also not be applied towards the earned income tax credit. This allows many military taxpayers to still receive this much needed tax credit.

All members of the military who are in a combat zone are entitled to an extension of the tax deadline. The tax deadline extension will vary for each military personnel depending on their release date from combat duty. The IRS gives all active military personnel an extra 180 days after their combat duty release date to file a tax return and make a payment if one is due.

Another common issue that many military personnel must deal with is the spouse that they left behind in the United States. Although the spouse of an active duty military personnel may be able to file their taxes on time it is not required. All military troops, including their spouses still remaining in the United States are entitled to an extension for having their taxes filed and paid for.

When some taxpayers are unable to pay their taxes for a previous year the IRS often works with each taxpayer to develop a payment installment plan. It is possible that active military personnel may be called to combat duty during the same period of the agreed upon payment installment plan. The IRS offers these military personnel an extension on paying the installment that is due.

For all of the tax issues that many active duty military troops face the IRS often provides a solution that is beneficial to everyone involved. Active duty military personnel deserve the tax benefits and exclusions that they are being provided; therefore, they should all take advantage of them.