Combat Zone Tax Exclusions

By Executive Order No. 13239, Afghanistan (and the airspace above) was designated as a combat zone beginning September 19, 2001. Disability compensation is paid to veterans disabled by an injury or illness that was incurred or aggravated during active… The current VA disability pay rates show compensation for veterans with a disability rating 10% or higher. The military retirement system is arguably the best one around, but proper planning is needed to ensure you can retire… Get the latest on pay updates, benefit changes and award-winning military content. Pressed by House panel Chairman Don Bacon to identify the top two quality-of-life issues facing their services, all the…

To qualify for combat-related tax benefits, you must be an eligible member who meets one of the following options with service in an area listed further below. IRS Publication 3, Armed Forces Tax Guide, is   another source for  military-specific tax matters. Military personnel and their families have access to a variety of tax preparation and filing services for free. By Executive Order No. 12744, the following locations (and the airspace above) were designated as a combat zone beginning January 17, 1991. By Executive Order No. 13119, the following locations (and the airspace above) were designated as a combat zone beginning March 24, 1999.

  1. IRS Publication 3, Armed Forces Tax Guide, is   another source for  military-specific tax matters.
  2. The military retirement system is arguably the best one around, but proper planning is needed to ensure you can retire…
  3. The following countries were certified by the Department of Defense for combat zone benefits due to their direct support of military operations in the Afghanistan combat zone.
  4. Personnel in these areas maintain, uphold and assist those involved in military operations in a designated combat zone.
  5. Department of Defense informs the IRS about members in the combat zone.

The circumstances around the group’s deployment darkened considerably over the past few months. A combat zone is any area the President designates by Executive Order as an area in which the U.S. An area usually becomes a combat zone and ceases to be a combat zone on the dates the President designates by Executive Order.

Military Pay Topics

To be considered
“earned” in the combat zone, the CSB/REDUX election must be accepted by
the Service and considered final in the month in which the member was in
the combat zone. The following countries were certified by the Department of Defense for combat zone tax benefits due to their direct support of military operations in the Arabian Peninsula combat zone. The amount of pay subject to the combat zone tax exclusion each https://turbo-tax.org/ month for O-1 and above is limited to the monthly basis pay for the senior E-9 of each branch plus the monthly hostile fire pay amount. Under the Tax Cuts and Jobs Act (TCJA) enacted in December 2017, members of the U.S. Coast Guard who performed services in the Sinai Peninsula can now claim combat zone tax benefits. Taxpayers may prevent issuance of such notices by notifying the IRS that they are working in a combat zone.

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Some areas outside of combat zones are designated direct support areas. Personnel in these areas maintain, uphold and assist those involved in military operations in a designated combat zone. To qualify for a combat zone tax exclusion, they also are required to be qualified to receive either hostile fire pay or imminent danger pay.

Bonuses and special pays are also excluded from taxable income if
within the previously stated limitations and earned in the same month in
which you served in a combat zone. For example, an enlisted
reenlistment bonus is excluded from taxes if the member reenlists in the
same month in which the member served in a combat zone. Since there is
no limitation on amounts excluded for enlisted members, the entire
reenlistment bonus would be excluded. As another example, an officer’s
flight pay would also be excluded from taxable income, but only up to
the point which basic pay and the flight pay do not exceed the maximum
enlisted pay amount. The Career Status Bonus received by members who may
choose between High-3 and CSB/REDUX retirement plans and who elect the
CSB/REDUX retirement plan also falls in this category.

Partial Month Service in a Combat Zone

There is no required action for you to receive the exclusion. Each military organization will automatically certify your entitlement by excluding reportable income on your W-2. If you believe you are entitled, and your W-2 reflects your full, unadjusted annual combat tax exclusion zones pay and benefits, contact your military pay office to issue a corrected W-2. The following countries were certified by the Department of Defense for combat zone benefits due to their direct support of military operations in the Afghanistan combat zone.

What Is Service in a Combat Zone?

Armed Forces in designated combat zones, also may qualify for the foreign earned income exclusion. Civilian taxpayers covered by the relief provisions described here should put the words “COMBAT ZONE” and their deployment date in red at the top of their tax returns. Members of the military do not need to write “COMBAT ZONE” and their deployment date on the tops of their tax returns because the U.S. Department of Defense informs the IRS about members in the combat zone. You are considered to be serving in a combat zone if you are either assigned to a combat zone or you qualify for hostile fire/imminent danger pay while in a combat zone. Service in a combat zone includes any periods you are absent from duty because of sickness, wounds, leave, or TAD/TDY, unless leave, TAD/TDY includes the full calendar month.

If you are a military member  who serves in a combat zone (defined below), you can exclude certain pay from your income when determining your taxes. These items offer guidance on the tax relief provided for U.S. military and support personnel involved in military operations in a combat zone. If you are an eligible member who served in a combat zone, the IRS can exclude your income from taxation. Publication 3, Armed Forces’ Tax Guide, the authoritative source for all military specific tax matters, covers the Combat Zone Exclusion.