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SOURCE: DE-Taxes, LLC
Compensation for active service while in a combat zone isn’t included in gross income. The exclusion for a commissioned officer – other than a commissioned warrant officer – is limited.
Wilmington, DE (PRWEB) November 20, 2012
If you receive tax-free combat pay, you can include it as earned income:
-
When determining the Earned Income Credit (EIC)
- When determining the additional child tax credit
- For purposes of making an IRA contribution
- Other Excludable Income
Even if you received the income as a reimbursement or an allowance, you don’t include this income in your gross income:
Living Allowances
- Basic Allowance for Housing — However, you can deduct mortgage interest and real-estate taxes on your home even if you pay these expenses with your basic allowance for housing.
- Basic allowance for subsistence
- Housing and cost-of-living allowances abroad, whether paid by the U.S. government or by a foreign government
- Overseas Housing Allowance
Family Allowances
- Certain educational expenses for dependents
- Emergencies
- Evacuation to a place of safety
- Separation
Death Allowances
- Burial services
- Death gratuity payments to eligible survivors
- Travel of dependents to burial site
- Moving Allowances
Dislocation
- Move-in housing
- Moving household and personal items
- Moving trailers or mobile homes
- Storage
- Temporary lodging and temporary lodging expenses
- Military base realignment and closure benefit
For the military base realignment and closure benefit, the excludable amount can´t be more than this equation:
95% of the fair market value of the property for which the payments were made (before public announcement of intent to close all or part of the military base or installation) – Property´s fair market value (at the time of sale) = Maximum military base realignment and closure benefit exclusion
The Department of Defense determines:
- 95% of the fair market value of the property for which the payments were made – before the public announcement of intent to close all or part of the military base or installation
- Property´s fair market value at the time of sale
Travel Allowances
- Annual round trip for dependent students
- Leave between consecutive overseas tours
- Reassignment in a dependent-restricted status
- Transportation for you or your dependents during ship overhaul or inactivation
Per diem
- You can deduct your travel expenses as an adjustment to income on Form 1040 rather than as a miscellaneous itemized deduction if both of these apply:
- You´re a member of the reserves.
- You travel more than 100 miles away from home in connection with your duties.
Other Payments
- Defense counseling
- Disability, including payments received for injuries incurred as a direct result of a terrorist or military action
- Group-term life insurance
- Professional education
- ROTC educational and subsistence allowances
- Survivor and retirement-protection plan premiums
- Uniform allowances
- Uniforms furnished to enlisted personnel
In-kind Military Benefits
- Dependent-care assistance
- Legal assistance
- Space-available travel on government aircraft
- Medical and dental care
- Commissary and exchange discounts
You can’t exclude the value of personal use of a government-provided vehicle.
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