Four Tax Tips for Armed Forces Personnel

As we honor those who have served our country and continue to serve this Veteran’s Day, we would like to share money saving tax tips for our troops protecting our country.

While you’re out there protecting our country, you may not be thinking about tax benefits available to you.

Here are some of the key tax benefits available to those in the military currently serving on active duty:

Key Income Exclusions

There are very few exceptions to the general rule that all income resulting from your work efforts (e.g., your job) are taxable.  But one of those rare exceptions applies to certain active duty military personnel: combat pay.

If you serve in a combat zone in a given month (Some recent examples include the Afghanistan area, the Kosovo area, and the Arabian peninsula.), your pay for that month is excluded from your W2.

As a result, you don’t need to do anything special on your tax return (like remembering to deduct the combat pay), because it will have already been removed from your W2.

In addition to combat pay, the Basic Allowance for Housing (BAH) and the Basic Allowance for Subsistence (BAS) are also excluded from your taxable income, so you’ll pay no taxes on those amounts either.

Extended Deadlines

Normal extension deadlines are until October 15th, but if something else is at play, say qualifying service in a combat zone or service in a contingency operation, you could receive a far longer extension.  If such a situation applies to you, your extended deadline is based on the date you left for the operation/combat zone and the date you returned.

Moving

If you move your permanent station, some moving expenses, such as the cost to transport your possessions and your family, are tax deductible.  Moving from home to your first permanent station also counts as a tax deductible move.

Not Available to Sign?

If one spouse is not available to sign his or her joint return (for example, because he or she is overseas, missing, or in a combat zone), the unavailable spouse could sign Form 2848 (Power of Attorney) before departing (or while away, if feasible).

If that should prove impossible, the available spouse can sign for the other spouse and indicate the reason for doing so when filing the joint tax return.

With thanks for your service, these are some of the top tax tips for active duty personnel.  TurboTax has TurboTax Military Edition to help you receive all of the tax benefits you’re eligible for.  Keep reading the blog for other tax and saving tips that might also be applicable to you.

Michael Rubin

Author of the bestseller Beyond Paycheck to Paycheck, and the upcoming The Savings Solution, Michael B. Rubin is a Certified Public Accountant (CPA) and a CERTIFIED FINANCIAL PLANNER professional. In addition to his experience providing sophisticated financial advice to affluent clients, Michael has been a key source of information for over a decade to countless others. He speaks passionately about and provides guidance on virtually all personal financial planning topics. Michael has appeared in various media, including radio and TV stations across the country, plus national media such as CNN Money.com, latimes.com, The Wall Street Journal, SmartMoney.com, Chicago Tribune, Financial Advisor Magazine, and Investment News. Prior to founding Total Candor LLC, Michael worked in the personal financial services practices of two of the former "Big Six" accounting firms. Subsequently working for several years as a new venture executive for Toys "R" Us, Inc., he made sure that he never actually grew up. He holds an undergraduate business degree from the Ross School of Business at the University of Michigan and an MBA from the Kellogg School of Management at Northwestern University. Michael lives in New Hampshire with his wife and children.

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