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Tax Benefits for Members of the Military

Tax Benefits for Members of the Military
This is a brief summary of some tax benefits for the members of the military sector – active duty personnel, reservists and vets.
Combat Pay Exclusion:  Active duty personnel in a combat zone can exclude military pay from taxable income (it will not be reported on your W-2) – other exclusions outside combat zones may be available also.
Earned Income Tax Credit (EITC):  Members of the military can choose to include tax-free combat pay as “earned income”; this could increase the credit without causing the combat pay to be taxable.
Joint Tax Return Signatures: Generally both spouses are required to sign a joint tax return; however, if one spouse is unavailable due to military obligations, the other spouse’s signature will suffice.
Tax Filing Extension:  If you’re outside of the U.S. and Puerto Rico performing military or naval services, your due date for taxes extends from April 15 to June 15 (however, it is only a filing extension, not an extension of the time to pay your taxes).
Reserve Officers’ Training Corps (ROTC): Educational and subsistence allowances paid to individuals participating in the college-based ROTC program generally aren’t taxable; however active duty compensation for these same individuals is subject to tax.
Travel Expense Deductions:  Members of the U.S. Armed Forces Reserves who travel more than 100 miles away from their home to perform their obligations can receive at tax deduction for certain unreimbursed travel expenses.  Some moving expenses for job-related moving may qualify for a moving-expense deduction also.
Disabled Veterans Benefits:  Disability compensation paid to a disabled vet is exempt from tax and a permanently disabled wartime veteran over age 65 may qualify for a tax-free pension.
IRA Contributions:  When it comes to the maximum you can contribute to an IRA (the combination of both a traditional and Roth IRA), combat pay counts as earned income (even though the combat pay is tax free).  The rule for maximum contribution is the lesser or $5,500 ($6,500 if age 50 or older) or the amount of your earned income.
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