Hey everyone, so my sibling recently got deployed and I'm trying to understand more about the various benefits for service members. I was specifically wondering about how tax exemptions work for deployed military personnel. Could any veterans or military family members share what they know? Is it automatic or does it need to be applied for? Thanks - appreciate the help!
Hello,
From my understanding, there are indeed some tax benefits available to active-duty service members, especially those who are deployed.
One of the notable ones is the Combat Zone Tax Exclusion. If your sibling is serving in a designated combat zone (as defined by an Executive Order from the President), a portion or even all of their military pay might be tax-exempt. Depending on their rank and the duration of their service in the combat zone, this could even extend to the entire month's pay where they entered the combat zone.
Deployment to a combat zone also extends the deadline to file and pay taxes by at least 180 days after the last day in a combat zone or the last day of continuous hospitalization due to injuries sustained in the combat zone.
The tax exclusion is typically automatic, meaning your sibling will not have to apply for it. The Defense Finance and Accounting Service (DFAS) should note the tax-exempt combat pay on their W-2 form. However, it's always a good idea for them to check to ensure everything has been excluded appropriately.
Remember, though, that this is just one of several potential tax benefits for service members. Other benefits could include deductions for moving expenses (if the move is due to a permanent change of station) or special rules for the Earned Income Tax Credit (EITC).
This is a complex area and might vary depending on individual circumstances. It might be beneficial to consult with a military tax expert or a service like VITA (the Volunteer Income Tax Assistance program) which provides free tax help to military members and their families.
Note: This is general advice and a proper tax professional familiar with military benefits should be consulted for accurate, personalized advice.
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