Tax rules for military personnel

Americans who serve in the military often face travel and moving costs due to frequent relocations, experience long stints overseas and incur job-related costs. Although members of the armed forces are required to pay income taxes like civilians, they may receive special tax treatment or qualify for a number of benefits.

For example, combat pay earned from serving in a designated combat zone is not considered taxable income. However, military members may include this type of pay on earned income when applying for the Earned Income Tax Credit, according to Fox Business. However, these benefits only apply to those serving in combat zones. Military personnel who are serving overseas in a safe zone may still be required to pay income taxes on wages.

Armed forces personnel who are serving in combat zones may also have more time to file their taxes. The Internal Revenue Service automatically extends the filing deadline by 180 days for those serving in designated areas, which begins on the last day they are stationed in this zone. The same extension is also given to those who are deployed from their permanent home base to serve in a contingency operation. Further, many military bases are equipped with a tax preparation agency to help members meet their needs.

Military personnel may also qualify for a number of deductions that can help lower their travel and business expenses. For example, reservists who must travel more than 100 miles from their home to perform their duties should track their mileage, as they may deduct these costs. Further, those who meet the 100-mile requirement may also deduct hotel lodgings, airfare and meal expenses. The cost of uniform upkeep, job-related education costs and professional membership fees may also be written off.

Lastly, those members who leave the armed forces and transition to civilian positions should also consider deducting job-search expenses, ranging from resume preparation and mailing fees to outplacement services and travel costs.

Military personnel should consult a tax preparer prior to deployment to better understand their tax benefits and filing requirements while overseas. This may help service members - or loved ones at home - better organize their documents and take advantage of all the rewards they are entitled to.

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Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.

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Posted To: Tax Ranger's Blog By: Tax Ranger On: Monday, September 10, 2012
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