The Interplay Between Military Deployment and Taxes

I've been thinking seriously about enlisting after graduation. Part of what I'm trying to figure out is how life in the military intersects with civilian stuff like taxes. Anyone got insights on how being deployed impacts your taxes?

Being in the military can bring unique considerations when it comes to filing your taxes, especially when you're deployed.

For starters, the U.S. federal tax system allows for an automatic extension of the deadline to file returns for individuals serving in combat zones. So, if you're deployed in a combat zone during tax season, you'll generally have at least 180 days after your last day in a combat zone to file and pay any taxes due. Also, any deadlines for performing other tax-related actions, such as filing an amended return or claiming a refund, are extended as well.

Income earned while serving in a designated combat zone is partially or fully tax-excluded, depending on your rank. If you're an enlisted member, warrant officer, or commissioned warrant officer, you can exclude all military pay earned for each month you served in the combat zone. Commissioned officers, however, have a cap on the amount they can exclude.

Another tax aspect of military service to consider are the conditions you have to meet to claim a foreign earned income exclusion when you're stationed abroad. The IRS mandates that you must have a tax home in a foreign country and meet either the bona fide residence test or the physical presence test.

Consideration for state taxes vary depending on the state. Some states do not tax active-duty military pay, while others offer tax credits or deductions. You can usually find this information on your state's department of revenue website.

Remember, tax laws change frequently and can be complex, so it's important to consult with a tax professional or military tax center to get the most current and relevant advice for your situation. For example, the IRS provides a free online guide called "Armed Forces' Tax Guide" that could be of help. There are also Volunteer Income Tax Assistance (VITA) sites on military bases which offer free tax advice and preparation, e-filing, and other tax help to military members and their families.