Understanding Taxes and Military Deployment

Hey there, I'm a rising high school junior strongly contemplating going into the military after graduation. I was wondering about the tax implications of being deployed - I've heard service members get some sort of tax break or extension or something along those lines. Could someone clarify how that works out and what to expect? Thanks!

Hello, it's great to see you considering your financial circumstances ahead of time. Yes, it's true that as a military member, there are specific tax benefits available to you, which can vary depending on your assignment location and type.

One of the tax benefits is the combat pay exclusion. When you serve in a combat zone, a part of your military pay, or even all of it in some cases, could be exempt from federal taxes. For instance, if you're an enlisted member, warrant officer, or junior commissioned officer, then your entire combat pay is non-taxable. For commissioned officers above a certain level, there might be certain restrictions, but a considerable portion is still excluded.

Another benefit is deadline extensions for filing returns. If you serve in a combat zone, you can benefit from an automatic extension for filing tax returns, making tax payments, and claiming refunds. The length of this extension varies, but it usually extends 180 days after your last day in a combat zone.

These are just two examples, there may be other benefits like the Earned Income Tax Credit (EIC) and deductions for moving expenses related to change of station. Bear in mind, that each state might also have its own specific policies towards military income, so it would be wise to check the state-related rules as well.

Remember to consult a tax professional or use resources such as the IRS's Armed Forces Tax Guide to gain a full understanding of the implications. It's an important step to plan for your financial future. Best of luck with your career planning!