JK Harris Provides Important Tax Information for Deployed Military Members

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Deployed military personnel can get certain tax provisions.

Over 100,000 military personnel and thousands of reservists and National Guard members have been deployed to the Middle East and Central Asia. While military members still generally have the same filing and payment requirements as other American citizens, Congress has enacted many tax provisions to benefit military personnel.

According to Peter Hukki, Enrolled Agent for JK Harris, the nation's largest tax resolution firm, members of the Armed Forces serving in a combat zone are entitled to an extension for filing their federal income tax return.

"Members of the Armed Forces in combat are entitled to an extension of 180 days plus the number of combat days served as the amount of time they have to file most tax actions. This includes estate, gift, employment, and excise tax returns of individual, sole-proprietors in a combat zone," said Hukki.

Military members' pay received while in a combat zone is excluded from gross income and is considered nontaxable for the period that they are in the combat zone. Military members who are hospitalized from injuries received in a combat zone receive this benefit for two years, although commissioned officers are subject to the maximum enlisted pay amount per month while in the zone.

"The ability to defer Installment Agreements set up by the IRS is another great tax benefit the military member receives while in combat. The military member must alert the IRS they are being deployed to a combat zone. The IA is then put on hold. The first day the combat zone is entered penalties and interest stop accruing while the member is in combat and for a period of 180 days plus the number of days the military member is in the combat zone, after they get home," said Hukki.

Reenlistment bonuses received after leaving the combat zone are excluded from income if the necessary actions for entitlement to a reenlistment bonus were taken in a month that you were in the combat zone.

Annual leave payments to enlisted Armed Forces members upon discharge from service are excluded from gross income to the extent the annual leave was accrued during any month in any part of which the member served in a combat zone. This applies to commissioned officers as well, subject to the maximum enlisted pay amount.

A fairly recent benefit was created with the enactment of the Heroes Earned Retirement Opportunities Act, signed into law on May 29, 2006 with a deadline of May 29,2009. Before this law, non-taxed combat pay, little or no taxable income caused service members to be ineligible to make a regular or Roth IRA contribution.

"Congress implemented a change retroactive to tax years 2004 and 2005. An amended return can be filed and IRA contributions can be made for those years," said Peter Hukki. "It is important to note that if a partial contribution to the retirement fund was made in those years, filing an amended return can allow a full contribution to be made."

Hukki reminds military taxpayers that while the deferment benefits are great in the short-term, the statute of limitations on any possible tax implications will be extended out along with the extensions for filing.

About JK Harris
JK Harris & Company, LLC, (http://www.jkharris.com) based in North Charleston, S.C., is the nation's largest tax resolution firm and has served over 200,000 customers since its founding in 1997 by John K. Harris. JK Harris consultants are available to meet with consumers in over 425 locations nationwide by appointment only. The company also provides services for student loan debt, investment fraud, fee-based financial planning, tax return preparation, and audit representation.


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