Hey, I've been considering joining the military after I graduate, but I've heard that taxes can get pretty complicated, especially if you're deployed. Can somebody clarify how taxes work for single, active duty individuals who are deployed, and if they get any tax extensions?
Sure, I'm glad to help clarify this for you! Serviceman or women, irrespective of their marital status, must pay federal and state income taxes just like civilians. However, there are some vital differences that you must keep in mind.
Firstly, your military pay is grouped into two categories: taxable and non-taxable. Basic pay, special and incentive pays, and bonuses are typically considered taxable income. Allowances for housing, subsistence, moving, and most combat or hostile area pays are generally not subject to taxes. The exact categorization may depend on the specific circumstances and the nature of your deployment.
Any person who serves in a combat zone or is hospitalized due to wounds, disease, or injury incurred while serving in a combat zone is granted a combat pay exclusion. For enlisted personnel, non-commissioned officers (NCOs), warrant officers, and commissioned warrant officers, their military pay for each month they served wholly or partly in a combat zone is excluded from gross income on their tax return. For commissioned officers, the monthly exclusion is limited to the highest enlisted pay, plus any hostile fire or imminent danger pay received.
As for tax extensions, the IRS provides certain tax benefits and deadline extensions to military personnel serving in combat zones. You'll benefit from an extended deadline for filing and paying your taxes after your return from a combat zone. The extension is typically 180 days after the last day you are in a combat zone, or the last day the area qualifies as a combat zone, or the last day of any continuous qualified hospitalization for injury from service in the combat zone.
Remember to consult the relevant tax laws or a tax professional for advice tailored to your individual circumstances. And the IRS provides some useful resources, including the IRS Publication 3, Armed Forces' Tax Guide, which you can access here: https://www.irs.gov/forms-pubs/about-publication-3
Good luck with your decision-making about your future!
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