Tax Deductions & Credits for US Military Service Members

Are you aware of tax deductions and credit for US Military Service members? Do you want to reduce your annual income tax returns? At, we are here to assist you in discussing all details related to military credits and deducts. So, stay tuned to know everything about tax credits and deductions for US Military service.

There are many US military personnel who are subjected to similar income taxes as any other American. Also, there are several tax deductions and credits that are available for service members. It may aid you in increasing your refund or decreasing your annual income tax bill. In this post, we will take a look at the military tax credits and deductions you might become eligible to report.

Nontaxable and Taxable Income For Military Personnel

Not all income from US military personnel that one gets is taxable. Few kinds of income are excluded from taxation. Military income that is taxable is:

  • Bonuses
  • Reserve training pay
  • Incentive pay and special pay (Hazardous duty, submarine, overseas extensions, flight, and HALO)
  • Student loan repayments
  • Active duty pay
  • Military service academy pay
  • Lum-sum payments rendered on release or separation
  • Mustering-out payments or accrued leave

The income of the Military that is not at all taxable includes:

  • Legal Help
  • Living allowances (e.g., BAS, OHA, BAH)
  • Eligible Hazardous duty area or pay for active service in a combat zone
  • Temporary lodging
  • Medical and disability benefits
  • Uniform allowances
  • Family separation allowances
  • Educational help

You must remember that: While the items discussed above are nontaxable, you have to decide them into specific financial considerations. For instance, while you pay for service in a combat zone, it is excluded from taxation; you may include it in your gross income when you calculate how much you will contribute to an IRA.

To get a complete knowledge of the military tax credits and deductions you may claim, let us go over some of the common examples.

US Military Tax Credits and Deductions

Combat Pay

Being a service member in the Military, you may exclude your pay from taxation on a monthly basis as you spent at least one day in a combat zone during that particular month. It also implies if you are in an eligible Hazardous duty area. Also, to your basic pay, you may exclude other income types that you received during that specific month, such as:

  • Incentives and rewards
  • Repayment of school loans
  • Bonuses
  • Leave benefits
  • Hostile fire pay
  • Imminent danger

Retirement pensions and pay do not become eligible for the exclusion of combat zone.

Travel Expenses

You may deduct specific unreimbursed costs when traveling for duty-related reasons. It does not apply if you are traveling for personal reasons. Deductible travel costs might include:

  • Laundry services
  • Meals
  • Airfare
  • Lodging

If you are a reservist, you may deduct travel expenses if your service needs you to travel more than 100 miles from your house.

Moving Expenses

If you shift because of any permanent change of station, you may deduct unreimbursed moving expenses. They are:

  • Crating and packing your possessions
  • Buying moving insurance
  • Hiring a moving trailer or van
  • Renting temporary storage for possessions.

Retirement Account Early Withdrawals

If your military service builds a financial hardship that needs you to make an early withdrawal from 401(k), other retirement accounts, and IRA, the IRS (Internal Revenue Service) might waive the charges that might apply typically. Your withdrawals still count as income and might be subject to taxation.

Uniform Expenses

Uniform-related expenses are not at all deductible. It includes:

  • Articles do not replace regular clothing, such as swords, insignia, and epaulets
  • Uniforms that you may be prohibited from wearing while you are off duty.

You may deduct the unreimbursed expenses of upkeep.

Post-Military Expenses

Even if you leave the Military, you can claim specific deductions. When you enter civilian society, you may claim tax deductions for particular work-related expenses like:

  • Resume Preparation
  • Travel
  • Moving expenses
  • Education
  • Job placement agency charges

Professional Dues

You may also deduct dues that are paid to an expert society that is related directly to your position in the Military, like an engineering society. It does not imply to officer’s club.

Claiming a Military Tax Extension

Also, in addition to credits and deductions, many military service members may also report a six-month income tax filing extension. You may file the Internal Revenue Service 4868 form. If, for any reason, you cannot report the complete six months, you are still eligible for a two-month extension.

If you are placed in a combat zone, you may get an automatic income tax filing extension until six months after leaving the combat zone.

What if you are behind on your income tax filing on US expat taxes?

Each citizen of the United States has to file an annual income tax return no matter what country they reside in. It is true in the case of military personnel as for anyone else. Also, several Americans are not aware of this obligation.

The IRS (Internal Revenue Service) offers an amnesty program to aid expats in coming into compliance without facing any charges. If you are among the several service members who do not know you have to file an income tax return, you should not panic at all. This is also called the Streamlined Filing Compliance process.

To use the amnesty program, all you have to do is:

  • You have to file the last three delinquent income tax returns and pay any delinquent income taxes that you have during that time with interest.
  • You have to self-certify that your failure to file was an accident and not willful.
  • You have to file an FBAR (Foreign Bank Account Report) for at least the last six years.

It will help you to bring compliance along with IRS rules.

Get expert assistance for your abroad income tax return.

We hope that in this post, you understood what military tax credits and deductions are available for service members in the US. If you have any doubts or queries, you can reach out to USTAXFiling. Also, we may even prepare and file your income tax return on your behalf.

Our dedicated and talented team of USTAX filing experts are highly qualified and have years of experience to help you file an overseas income tax return. Also, they have all the latest updates related to income tax returns, so they make sure to resolve your issues at the earliest at USTAXFiling. At USTAXFiling Expat Tax Consultant, we specialize in assisting expats around the globe to manage their obligations of US taxes. You can connect with USTAXFiling anytime, and we are here to help you in whatever way we can. What are you waiting for? Connect with USTAXFiling experts now!

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