If you are a member of the U.S. Armed Forces, the IRS wants you to know about the many tax benefits that may apply to you. Special tax rules apply to military members on active duty, including those serving in combat zones. These rules can help lower your federal taxes and make it easier to file your tax return.
Here are some important tax benefits:
1. Federal Filing Deadline Extensions - Qualifying military members, including those who serve in a combat zone, can postpone some tax deadlines. This includes automatic extensions of time to file tax returns and pay taxes.
2. Exclusion of Combat Pay- If you serve in a combat zone, you can exclude certain combat pay from your income. You won’t need to show the exclusion on your tax return because qualified pay is not included in the wages reported on your Form W-2, Wage and Tax Statement. Some service outside a combat zone also qualifies for this exclusion.
3. Earned Income Tax Credit - You can choose to include nontaxable combat pay as earned income to figure your EITC. You would make this choice if it increases your credit. Even if you do, the combat pay remains nontaxable.
4. Moving Expenses - You may be able to deduct some of your unreimbursed moving costs if you had to move due to a permanent change of station.
5. Deductions for Uniforms - You can deduct the costs and upkeep of certain uniforms that regulations prohibit you from wearing while off duty. You must reduce your expenses by any reimbursement you receive for these costs.
6. Signing Joint Returns- Both spouses normally must sign joint income tax returns. However, when one spouse is unavailable due to certain military duty or conditions, the other may, in some cases, sign for both spouses, or will need a power of attorney to file a joint return.
7. Reservists’ Travel Deduction- If you are a member of the U.S. Armed Forces Reserves, you may deduct certain travel expenses on your tax return. A deduction for traveling more than 100 miles away from your home to perform reserve duties can be taken for unreimbursed expenses.
8. Non-taxable ROTC Allowances - Educational and subsistence allowances paid to ROTC students participating in advanced training are not taxable. However, active duty pay – such as pay received during summer advanced camp – is taxable.
9. Tax Help - Free tax preparation and filing assistance is offered at most military bases during the tax season. Some also offer free tax help after April 15th.
You can learn more about these tax benefits in IRS Publication 3, Armed Forces’ Tax Guide. The booklet is available on the IRS website or you can order a copy by calling 1-800-TAX-FORM (800-829-3676).