Any form of pay earned while on deployment in a combat zone is excluded from federal income tax. This translates to a significant tax savings for the active service member in combat and his family back home.

How much does a soldier make during deployment?

Military members who are assigned or deployed to a designated combat zone are paid a monthly special pay, known as combat pay (or Imminent Danger Pay). The amount paid is $225 per month for all ranks.

How do deployed soldiers file taxes?

Filing Taxes When a Servicemember Is Deployed

1. File returns in your permanent home state. If you are stationed somewhere other than your permanent home address, in most cases you will still pay state taxes to your home state.
2. Be sure to have power of attorney if filing for a deployed servicemember.

What are tax considerations for active duty military?

Preparing active duty service member tax returns requires advance consideration of specific tax issues. It is common for service members to be in any or more than one of these tax situations at a given time. Understanding these tax situations allows practitioners to better serve military clients and create better tax planning opportunities.

Can a deployed service member file a tax return?

Deployed service members are expected to file their taxes. Fortunately, the Internal Revenue Service realizes service members and their families face unique circumstances and offers tools – and some special extensions – to make tax filing easier.

When do you pay taxes after you leave the military?

If a service member’s ability to pay an income tax liability is materially affected by his or her military service, tax is deferred up to 180 days after termination of service, without any accrual of interest or penalties for that period (50 U.S.C. §§570 (a)- (b)).

When to apply for tax deferral for the military?

Be sure to include any nondeductible IRA contributions on line 1 of Form 8606, Nondeductible IRAs. Any members of the Armed Forces, who can prove to the IRA that their inability to pay their income taxes is due to their service in the military can apply to defer tax payments until 180 days after their release from military service.