You have sacrificed your youth, precious time, and the warmth of family to keep not only
Americans, but at times citizens from across the world safe. You deserve more than admiration
and gratitude. It’s that time of the year when we honor our veterans. Since its almost Veteran’s
Day, so let’s discuss some of the tax benefits for the U.S. military forces. Some types of pay are
not taxable. And special rules may apply to some tax deductions, credits and deadlines.

These rules apply to all branches of U.S. Armed Forces, whether they are National Guard,
Reserves, or Active Duty:

• Filing tax returns late
  Service members have up to the later of 180 days after returning from a combat zone
  deployment, or combat related hospital stay, to file tax returns without late penalties or
  interest. Military members have until June 15th to file returns if they are overseas and not in
  a combat zone.
• Combat Pay Exclusion
  If you serve in a combat zone, certain combat pay is not taxable. You won’t need to show
  the pay on your tax return because combat pay isn’t included in the wages reported on your
  Form W-2, Wage and Tax Statement. Service in support of a combat zone may qualify for
  this exclusion.
• Qualified Reservist Distributions and Repayments
  Reservists who are called into active service, may be able to take distributions from
  retirement accounts (IRA, 401K, TSP, etc.) without penalty and may also repay any
  distributions taken, even if the repayment exceeds the annual IRA contribution limit. This is
  like borrowing from a 401K and paying it back. Certain conditions apply, ask Azmoneyguy
  or your tax professional.
• Selling a Home for tax purposes and getting the Capital Gain Exclusion
  Time deployed counts for the five-year living at the same address rule, to help sell the home
  and avoid Capital Gains. You must live in your home 2 of 5 years to get Capital Gains
  Exclusion.
• Overnight Travel Expenses for National Guard and Reserve members living more than
  100 miles from duty station.
  This deduction is on the front of the tax return, and no itemizing is needed. This allows you
  to write off travel, lodging, and meal expenses.
• Deductions for Uniforms, Equipment and Laundry
  You can write off uniforms you buy, or any repairs made to them, as well as the cost of
  laundering the uniforms, plus any military equipment you buy for your use. There are special
  rules that allow military personnel to even deduct the cost for laundry and haircuts, if away
  from home for less than one year on temporary duty.

• Some states offer little or no state tax on military members and spouse’s earnings.
  Arizona and many other states have no tax on military pay, and no tax on the spouse’s
  earnings either. You can claim residence in any state if you are on active duty in the military.
  For instance, you can be stationed in Ft. Huachuca, Arizona and still claim Nevada residency.
  This means you would not have to prepare an Arizona tax return, if you are active in the
  military. This would allow you to not pay state taxes to the State of Arizona even while you
  are stationed and living in Arizona. This also counts for vehicle registration tax.

• Be sure to check on the laws of the state you are living in for your situation with Azmoneyguy or your
  tax professional.

• Military allowances are tax-free.
  Some examples of allowances would be Clothing Allowance, Family Separation Allowance,
  Base Housing Allowance, Per Diem Allowance, and Temporary Duty Allowance. These are
  all monies that are given to you in addition to your regular payroll that is not subject to tax.
• Forgiveness of tax upon Death
  Current year, previous year and unpaid taxes are forgiven and/or refunded when military
  members die, if they are active duty during either a terrorist event, in a combat zone, or in
  support of a military combat action.
• Earned Income Tax Credit (EITC)
  If you get nontaxable combat pay, you may choose to include it to figure your EITC. You
  will make this choice only if it increases your credit. Even if you do, the combat pay stays
  nontaxable.
• Signing Joint Returns
  Both spouses normally must sign a joint income tax return. If your spouse is absent due to
  certain military duty or conditions, you may be able to sign for your spouse, by attaching a
  copy of the military combat orders. In other cases when your spouse is absent, you may need
  an IRS power of attorney to file a joint return.
• Moving Expenses
  Members of the military still get to take a deduction for the out-of-pocket costs of moving
  household goods and family members, to include pets, for any costs not already paid for or
  reimbursed by the military.

Call today, don’t delay! See how this affects you. We can be reached at 602-264-9331 and on all social media under azmoneyguy.

Related Blog Posts