Tax Facts

Tax Benefits for Military Members

There are many tax benefits for members of the military, their families and disabled veterans. Here are tips designed to help service members and their families take advantage of all tax benefits allowed by law.

• Certain combat pay can be excluded from income.

• Armed forces reservist expenses whose reserve-related duties take them more than 100 miles from home can deduct their unreimbursed travel expenses as an adjustment to income rather than as a miscellaneous itemized deduction. This adjustment appears on Page 1 of the 1040 and qualifying to file a Schedule A is not necessary.

• Members of the armed forces on active duty who move because of a permanent change of station are not required to meet the time and distance tests to deduct eligible unreimbursed moving expenses.

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

• Low- and moderate-income service members who contribute to an IRA or 401(k)-type retirement plan, such as the federal government’s Thrift Savings Plan, can often claim the Saver's Credit, also known as the Retirement Savings Contributions Credit, on Form 8880, Credit for Qualified Retirement Savings Contributions.

• Service members stationed outside the U.S. and Puerto Rico qualify for a two- month extension to file a federal income tax return. An extension to file does not mean you have an extension of time to pay any tax due.

• The deadline for filing tax returns, paying taxes, filing claims for refund, and taking other actions with the IRS is extended for those serving in a combat zone.

• Service members may qualify to delay payment of income tax due before or during their period of service. Requirments must be met, so contact your tax advisor if you are unsure of the rules that apply to you.

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