Tax Tips

Tax Tip

Overview

You must report your basic pay from active duty to the IRS.
Any special pay, including aviation career incentives and diving duty must also be reported to the IRS.
You may not exclude personal use of a government-provided vehicle.

As a military service member, there are specific rules about what you have to report to the IRS as income and what you don't have to report. The following items must be included in your reported gross income unless payment was received for service in a combat zone. Military taxpayers who receive tax-free combat pay can continue to include it as earned income when determining the Earned Income Credit and Additional Child Tax Credit, and for purposes of making an IRA contribution.

Basic Pay

active duty
attendance at a designated service school
back wages
drills
cost-of-living allowances in the continental U.S.
reserve training
training duty

Special Pay

aviation career incentives
career sea
diving duty
foreign duty
foreign language proficiency
hardship duty
hostile fire or imminent danger
medical and dental officers
nuclear-qualified officers
optometry
pharmacy
special-duty assignment pay
veterinarian

Bonuses

career status
enlistment
officer
overseas extension
re-enlistment

Other Payments

accrued leave
personal money allowances paid to high-ranking officers
student loan repayment from programs such as the Department of Defense Educational Loan Repayment Program — only when the required year's service is not spent in a combat zone

Note: You may not exclude personal use of a government-provided vehicle.

People Who Read This Also Read