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Special Tax Benefits For the Armed Forces

Special Tax Benefits For the Armed Forces

If you serve in the military, it's important to understand your military tax benefits so that you can get the most out of them when filing taxes. The Federal Tax Code has specific military benefits that are designed to help offset the burden of service over time and provide additional financial compensation. If you serve in the military, it's important to understand your military tax benefits so that you can get the most out of them when filing taxes.


Tax-Exempt Allowances

The military payment has several elements. In general, armed forces compensation consists of basic pay, such as a salary, plus accommodation and food allowances.

Allowances for housing and food are exempt from state and federal income tax and social security tax, although regular cost-of-living adjustments are taxable. As these exempt payments represent, on average, more than 30% of an armed force member's total regular salary, this tax benefit allows military members to keep significantly more of their pay than situated civilians under similar conditions.


Combat Zone Exclusion

When an armed force member is deployed to a combat zone, the base salary or reintegration bonuses paid during this period are excluded from taxable income.

  • Essentially, if a soldier spends part of the month in a combat zone, all monthly income is exempt from state and federal taxes.

  • There is a dollar limit for officers, but not for enlisted members.


Miscellaneous Itemized Tax Deductions.

Like ordinary civilian taxpayers, military personnel can choose to record their tax deductions on their income tax returns. Certain aspects of military life provide an opportunity to list expenses, such as

  • Necessary trips,

  • Education and

  • Other non-reimbursable employee expenses include maintaining uniforms that cannot be worn outside of work.


Travel and Transportation Costs

Members may deduct unreimbursed travel and transportation expenses when traveling for official purposes away from the permanent duty station. Eligible expenses include:

  • Transportation to official meetings or corporate events outside the normal workplace (but not to and from the normal workplace).

  • Meals, accommodation, and other usual and necessary expenses related to the activity.

Travel expenses are not deductible for military personnel posted abroad or traveling for personal reasons.


Unreimbursed Educational Expenses 

Members of the military may also deduct unreimbursed tuition fees related to their status as serving officers. The non-refundable tuition fees will be tax-deductible as a deduction shown on your personal income tax return if the education,

  • Is obliged to keep his job and serve a legitimate defense purpose or

  • Maintains or improves the necessary skills.


Forgiveness of Tax Liability

In the event that a member of the military is killed while on deployment to a battle zone or later dies from an injury in a battle zone, their existing tax obligations may be waived, and even taxes paid may be reimbursed to his or her family.

  • If a serviceman is killed in a terrorist or other military operation, he would likewise be qualified for the forgiveness of his federal tax debt.

  • In order to obtain this compensation, a personal representative must immediately request a tax amnesty.


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