Armed Forces Members May Be Entitled to Special Tax Benefits

With the celebration of Memorial Day being this week, Bond and Botes would like to personally thank all members of the US Armed Forces that have previously served or are currently serving this wonderful country. We are beneficiaries of the freedoms gained through the sacrifice of great men and woman. Thank you so much for your service.

If you are a member of the United States Armed Forces, you and your family are often eligible for certain tax breaks. For example, members of the armed forces do not have to pay taxes on some types of income. Also, special rules can also lower the tax you owe or give you additional time to file and pay your taxes.

No matter what time of the year, it’s good for members of the military and their spouses to familiarize themselves with these potential tax benefits.

Tax Benefits

1. Combat Pay Exclusion - If someone serves in a combat zone, part or even all of their combat pay is tax-free. This also applies to people working in an area outside a combat zone when the Department of Defense certifies that area is in direct support of military operations in a combat zone. There are limits to this exclusion for commissioned officers.

Current Combat zones are as follows – Afghanistan, Jordan, Kyrgyzstan, Pakistan, Tajikistan, and Uzbekistan, Djibouti, Yemen, Somalia, Syria, Sinai Peninsula, The Federal Republic of Yugoslavia (Serbia/Montenegro), Albania, Kosovo, The Adriatic Sea, The Lonian Sea – (North of the 39th Parallel), The Persian Gulf, The Red Sea, The Gulf of Oman, The part of the Arabian Sea that is north of 10 degrees north latitude and west of 68 degrees east longitude, The Gulf of Aden, Jordan, Lebanon, Iraq, Kuwait, Saudi Arabia, Oman Bahrain, Qatar and the United Arab Emirates.

2. Deadline Extensions. Some members of the military, such as those who serve in a combat zone, can postpone most tax deadlines. Those who qualify can get automatic extensions of time to file and pay their taxes.

3. Stateside Spouse May Sign Joint Returns - Normally, both spouses must sign a joint income tax return. If military service prevents that, he stateside spouse may can use a ‘power of attorney’ to sign for their active Military spouse.

4. ROTC allowances. Some amounts paid to ROTC students in advanced training are not taxable. This applies to allowances for education and subsistence. Active duty ROTC pay however is taxable. For example, pay for summer advanced camp would be taxable.

If you find yourself owing a tax debt of any kind and are wondering how to deal with it, please contact us to schedule an appointment for a free initial consultation. If you would like to discuss your options for dealing with your other debts via Bankruptcy, we can answer all your questions regarding Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, stopping a foreclosure or wage garnishment, avoiding liens, stopping law suits, discharging medical debt, personal loans, payday loans, credit card debt, etc.  We can alleviate your stress! We want to help, and we can help you!