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Worth Fighting For: Tax Benefits for Members of the Armed Forces

If you’re a military Service member, Congress recognizes your patriotism and sacrifice by including designated, individual tax benefits and breaks in the tax code.

Special rules exist that can lower your tax liability or even give you more time to file your individual income tax return and pay the taxes due. Under certain circumstances, you can earn some or all of your compensation tax-free.

Here are ways you may qualify for benefits:

  • Combat Pay Exclusion – if you serve in a combat zone or provide direct support, a portion or even all your combat pay is tax-free. For commissioned officers, this benefit is limited.
  • Deadline Extensions – Certain members of the military, such as those serving in combat zones or Reservists mobilized to active-duty, can postpone payment deadlines. If you qualify, you get automatic extensions of time to file and pay your taxes.
  • EITC (Earned Income Tax Credit) – If you’re serving and earning nontaxable combat pay you may choose to include these earnings in your taxable income to increase the amount of EITC. This approach may enable you to owe less tax and receive a greater refund.
  • ROTC Allowances –Some of the pay ROTC students earn in advance training is not taxable. This rule applies to allowances for education and subsistence. Note, though, that active ROTC pay is indeed taxable.
  • Separation and Transition to Civilian Life – When Service members leave the military to look for civilian work, they may deduct some job-search expenses, including travel, résumé and job placement fees. Expenses incurred during moving may also apply.
  • Tax Help – Lots of military bases offer free tax preparation and filing assistance during the tax season. Some even offer free tax help after the filing deadline. Check with your base or legal officer for more information.
  • Special Deductions – Some special deductions can apply depending on certain circumstances. If you’re a drilling Reservist and your duties take you more than 100 miles from home, you may deduct unreimbursed travel expenses on Form 2106. You can also deduct the cost and upkeep of your uniform, but only if rules say you’re not allowed to wear it off-duty.

We hope you find this information useful. For more info refer to IRS.gov/Military or Publication 3, Armed Forces’ Tax Guide, on IRS.gov.

The tax accountant team at Patrick & Robinson CPAs knows our liberty must always be defended and we salute the men and women who keep us safe and free. Listed below are some more resources you may find useful, and of course, contact us at your convenience: Office@CPAsite.com or (904) 396-5400.

Thank you for your service!

Additional IRS Resources:

IRS YouTube Videos:

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