Military Armed Forces Tax Deductions
There are many tax benefits available to military personnel, including tax deductions, combat pay exclusions, extended deadlines, and other benefits. When you prepare and e-File Your 2019 Tax Return on eFile.com, the eFile app will determine the correct tax breaks you qualify for based on your answers to several simple questions, as well as report the right amounts on your return. However, if you are interested in the details, read on to find information about the various tax concerns that are specific to members of the armed forces.
If you are in the U. S. Armed Forces, you may be eligible for special tax breaks. For instance, some types of pay are not taxable (i.e. allowances for uniforms and Reserve Officers' Training Corps, or ROTC) and there are several tax-free expenses you do not have to report on your tax return. As a member of the armed forces, there are certain rules that you may be able to apply to tax deductions or tax credits that can lower your tax. You may even get more time to file your tax return and get more time to pay your income tax. Here are some tax breaks that you might be able to take advantage of:
- Deadline Extensions: If you serve in a combat zone, you may be able to postpone some tax deadlines. If you are eligible for this, you may get an automatic extension of time to file your tax return and pay any taxes that you owe. Certain combat pay is not taxable while serving in a combat zone. This type of pay will not be included on your tax return and therefore is not considered taxable income.
- Earned Income Tax Credit or EITC: Your nontaxable combat pay will be used in the calculation of your Earned Income Tax Credit which may give you a larger EITC credit. Even in this case, your combat pay remains nontaxable.
- Moving Expense Deduction: If you as an Active-Duty Service member are asked to relocate - change station - due to a military order, you can still deduct moving costs on your federal tax return. For all other tax payers the moving expense deduction has been removed due to the 2018 Tax Reform Act. Some States e.g. Massachusetts still allow moving expenses.
- Uniform Deduction: You may be able to deduct the costs of the purchase and upkeep of your uniforms. These uniforms must be those that you cannot wear if you are off duty. If you get an allowance for your uniform, your deduction must be reduced by that allowance amount.
- Signing Joint Returns: If you are filing a married filing joint return, it must be signed by both spouses. If your spouse cannot sign the return because of absence due to military duty, you may be able to sign the return for your spouse.
If you want to learn about other deductions you may qualify to claim, read on.
Reservists’ Travel Deduction
If you travel as a member of the U.S. Armed Forces Reserves, you can generally deduct the costs of travel on your return. This includes unreimbursed travel costs while you are performing reserve duties more than 100 miles from your home. The amount of expenses you can deduct as an adjustment to gross income is limited to the regular federal per diem rate for lodging, meals, and incidental expenses and the standard mileage rate (for car expenses), plus any parking fees, ferry fees, and tolls.
In order to qualify as a member of a reserve component of the Armed Forces of the United States, you must be in the Army, Naval, Marine Corps, Air Force, or Coast Guard Reserve, the Army National Guard of the United States, the Air National Guard of the United States, or the Reserve Corps of the Public Health Service. If, as part of your duty as a reservist, you must travel more than 100 miles from home, you should complete Form 2106 and attach it to Form 1040. You can prepare and e-File these forms with your 2019 Tax Return on eFile.com.
You may not deduct expenses for travel that does not exceed 100 miles from home, as an adjustment to gross income. In this case, you must complete Form 2106 and deduct the expenses as an itemized deduction on Schedule A. The e-File app will generate this schedule if you qualify for it as you complete your 2019 Return on eFile.com.
If you are in Reserve Officers' Training Corps (ROTC) advanced training and get an allowance for education and room and board, these amounts are not considered taxable. Don’t get this confused with active duty ROTC pay which is considered taxable income.
Tax-Free Expenses for Members of the Armed Forces
Some examples of tax-free expenses are:
- Uniform allowances
- Basic Allowance for Housing
- Basic Allowance for Subsistence
- Moving expenses
- Temporary lodging
- Travel expenses when on leave between consecutive overseas tours of duty
- Annual round trip for student dependents
- Dependent-care assistance program payments
- Disability payments
- Medical and dental care
- Defense counseling
- Group-term life insurance premiums
- Survivor Protection Plan premiums
- ROTC allowances
- Family Separation Allowance
- Combat zone pay (see below)
Military Filing Automatic Deadline Extension
Most individuals must file their tax return by the regular due date (April 15). For 2019 Tax Returns, it was extended from April 15 to July 15, 2020 due to the COVID-19 crisis. If you were serving in a combat zone or outside the U.S. you were eligible for an extension. Please note that any extension is not an extension of time to pay any tax owed by the regular due date of the return. Therefore, interest and/or penalties might be charged on any taxes owed from July 15, 2020 to the date the taxes are paid. If you missed the July 15 deadline you have until October 15, 2020 to e-file your return.
Combat Zone Filing Deadline Extension
All military personnel serving in a designated combat zone or contingency operation on July 15, 2020 were granted an automatic 180-day extension of time to file and time to pay. The 180-day extension period does not begin until after you leave the combat zone. You may add to the 180 days the number of days that you had left to file when you first entered the combat zone. You also get the automatic combat zone extension if you were in the hospital on July 15, 2020 as a result of injuries received while on duty in a combat zone. In this case, the 180-day extension period begins after you are released from the hospital, and you may add to it the amount of time you had left to file when you first entered the hospital.
The current official combat zones are:
- Afghanistan Area: Jordan, Kyrgyzstan, Pakistan, Tajikistan, Uzbekistan, Philippines, Djibouti, Yemen, Somalia and Syria
- The Arabian Peninsula Area: The Persian Gulf, Red Sea, Gulf of Oman, Arabian Sea (north of 10 degrees north latitude and west of 68 degrees east longitude), Gulf of Aden, Bahrain, Kuwait, Oman, Iraq, Qatar, Saudi Arabia, and the United Arab Emirates, Jordan, Lebanon, Turkey (east of 33.51 degrees east longitude)
- The Kosovo Area: The Federal Republic of Yugoslavia (Serbia and Montenegro), Albania, Kosovo, Adriatic Sea, and Lonian Sea (north of the 39th parallel)
- Sinai Peninsula
Combat Zone Tax Exclusion
If you are stationed in a combat zone for at least one day out of a month, not only should you receive a nontaxable combat pay allowance for that month, but the entire month's regular salary may be excluded from your taxable income. Any Hardship Duty Pay and Family Separation Allowances you receive may also be excluded. In addition, service in an area outside of an official combat zone may be considered (for tax purposes) to be performed in a combat zone if the Department of Defense has declared the service to be in direct support of operations occurring in a combat zone. You may actually want to report some of your normally nontaxable combat pay as taxable income if you are claiming the Earned Income Tax Credit. Learn about special Earned Income Credit rules for the military.
More Military Tax Relief
- The Earned Income Tax Credit may be claimed by certain workers who earn a low income. The credit can reduce the amount of taxes you pay and may increase your tax refund. Many military personnel miss taking the credit because they do not report enough taxable income to qualify for it. The Working Families Tax Relief Act of 2004 and the Gulf Opportunity Zone Act of 2005 gave military personnel the option of reporting some of their untaxed combat pay as taxable income. Doing this may allow you to qualify for the Earned Income Tax Credit.
- If a member of the Armed Forces dies in service to our country (while on active duty in a combat zone or from wounds received while in a combat zone), then that person's tax liability may be forgiven. Income tax payments that the deceased member submitted in the year the death occured may be refunded.
See what other tax deductions you may qualify to claim on your tax return. You can also use our Free Tax Tools to calculate taxes or determine eligibility for certain tax credits. Then, to get a complete idea of your taxes, complete and eFile Your 2019 Tax Return on eFile.com. The eFile app will calcuate and report your correct tax breasks based on your answers to several simple questions.
Contact an eFile.com Taxpert if you have more questions about military tax deductions.
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