Combat zone deployment and taxes - What's the drill?

Hey guys, I've been thinking about joining the armed forces after HS. But there's this thing I'm curious about - what happens with taxes when you're deployed in a combat zone? Does it change anything, or is it the same as any other deployment?

Hello! When you're deployed in a combat zone as a member of the armed forces, there are indeed some important tax benefits and considerations that come into play.

Firstly, if you serve in a combat zone as an enlisted person or as a warrant officer (including commissioned warrant officers) for any part of a month, all your military pay received for military service that month is excluded from gross income for income tax purposes. You don't even need to be in the combat zone for the entire month to qualify for this exclusion - even a fraction of the month qualifies you for exclusion for the entirety of that month.

Officers also receive a similar benefit, but there is a limit to the amount of their pay that can be excluded. The amount of officer's exclusion, however, is capped at the highest enlisted pay level plus any hostile fire or imminent danger pay received for each month of service in the combat zone.

Income tax is not withheld from the pay you earn while in a combat zone (or while hospitalized due to injuries sustained in a combat zone). This benefit extends for a certain period after leaving the combat zone as well.

Furthermore, often serving in a combat zone will grant you an automatic extension to file your income tax return without any penalties. This extension gives you at least 180 days after your last day in a combat zone to file and pay any tax due.

One important detail though is remembering to inform the IRS of your deployment into a combat zone. This can often be done through the legal office at the deployed location.

All of these changes definitely make a significant difference compared to other deployments, and can be an important factor in your financial planning! Please be sure to seek professional tax advice before making any decisions.