In order to ensure that members of the uniformed services receive the benefits they are entitled to, the IRS has dedicated a section of their website to providing tax assistance to service members. Taxpayers can also refer to Publication 3: Armed Forces’ Tax Guide.
Some highlights of the benefits:

  • Active duty pay earned in any month served in a combat zone is excluded from income. The IRS provides a complete list of all combat zone, hazardous duty, and contingency areas.
  • For U.S. armed forces serving in combat zones or qualifying contingency areas, the filing deadline is automatically extended for at least 180 days after the last day of qualifying service.  
  • Reenlistment bonuses are exempt from income if the reenlistment occurs in a month served in a combat zone.

The exempt military pay will not appear on your W-2 in the “Wages, tips, and other compensation” box, but it will appear as “Social Security wages” and “Medicare wages.” When filing a return, mark Combat Zone across the top of the form along with the deployment dates.

Would you like to receive tax preparation assistance? The Volunteer Income Tax Assistance (VITA) office provides free tax preparation and filing service to military service members. VITA offices are located on most military installations and the representatives there can answer your tax questions and help you prepare your federal tax returns.

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