7 Special Tax Benefits for Members of the Armed Forces

A man in military uniform seen from behind holding hands with a small child. Outdoor scene on a hiil overlooking a neighborhood

Certain unique tax benefits apply to members of the U. S. Armed Forces.  For complete information about these benefits, current year tax laws, and what circumstances qualify, please read IRS Publication 3 Armed Forces’ Tax Guide.

1. Extra time to file

Some members of the military can qualify for an automatic extensions of time to file and to pay taxes. If your client is in a combat or contingency zone, they don’t need to take any action to receive extra time. If your client is in the U.S., they should file Form 4868 or pay any part of their expected tax due to get a 6-month extension.

2. Combat Pay Exclusion

If your client served in a combat zone, certain combat pay they earned is not taxable and–consequently–won’t be reported on their W-2. You won’t need to report this on the return you prepare for them.

3. Earned Income Tax Credit

If your client has nontaxable combat pay, they have the option to include it in the calculation of their EIC. Even so, the combat pay stays nontaxable.

4. Moving expense deduction

If your client experienced a permanent change of station (PCS), they may be allowed to deduct some unreimbursed moving expenses. Be certain that any expenses you deduct are not covered by the military’s moving allowance.

5. Uniform deduction

If your client purchased and pays for the upkeep of a uniform that regulations prohibit them from wearing while off duty, those expenses could be deductible. If they receive an allowance to cover uniform costs, you must reduce the deduction by that amount.

6. Signing joint returns

If your client is absent due to certain military duty or conditions, their spouse may be able to sign for them without obtaining a power of attorney.

7. Reservists’ travel deduction

Members of the U.S. Armed Forces Reserves may deduct the unreimbursed costs of travel to perform reserve duties that are more than 100 miles away from their home.

This article was last updated on March 22, 2022.