Hi there, folks! I've been contemplating the idea of joining the military after high school. But, before making a decision, I wanted to understand the implications this may have on my future finances. Specifically, how are income taxes handled for those deployed in the military? Thanks in advance!
Good question! Joining the military certainly has financial implications, and it's a responsible move to be looking into these matters.
Typically, the income a service member receives while in active service is indeed taxable. However, some types of pay and allowances can be excluded from income, such as combat pay, which is not taxed by the federal government. This means that if you're serving in a designated combat zone, a portion or potentially all of your earned income might not be subject to taxation.
It's also worth noting that income is still subject to state taxes, but some states offer exclusions similar to those of federal taxes for military personnel. It may be beneficial to consult a tax professional to understand the specific rules and exemptions that may apply based on your state of residency.
Furthermore, service members may be eligible for deadline extensions for filing and paying their taxes if they're deployed in a combat zone or serving abroad.
Keep in mind, this is general information and tax laws can change, so securing professional financial advice may be beneficial.
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