Active duty is a status that military personnel hold; it indicates they are engaged in full-time employment by the military. Various tax laws allow those on active duty in the U.S. Armed Forces to take deductions that decrease their taxable income and thereby decrease their total tax burden.
Combat Zones
Military personnel who are serving in combat zones can take a combat zone tax exclusion. While a tax exclusion is not technically the same as a tax deduction, it is virtually the same in practice. During the time in which a member of the armed forces serves in a combat zone, all pay he receives from the military for that month is exempt from all federal income tax. Service in a combat zone for even one day out of a month makes a service member eligible for a tax exclusion for that entire month.
State Taxes
In addition to federal income tax, many states levy their own income taxes on their residents. This can become problematic for servicemembers and their families when the spouse of a service member works in a state other than the one where the active duty servicemember claims residence. To protect servicemembers and their families, the federal government has instituted the Servicemember's Civil Relief Act. This act ensures that spouses in such situations do not have to pay income tax for both states.
Child Care
When military personnel are deployed, they may have an increased need to pay for child care, especially if they are single parents. In such circumstances, such military personnel can take advantage of a child care tax credit, which accounts for the costs that working people incur by sending their children to daycare or by putting them into the care of babysitters at home. You can claim a credit of up to $3,000 in expenses for one child or up to $6,000 in total expenses for multiple children.
Death Gratuity
If a military member perishes while in active duty, his family is eligible to receive a death gratuity from the federal government. The purpose of this payment is to help the family deal with the economic hardships stemming from such loss of life. Although this gratuity payment comes as a direct result of the military member's professional service, it comes completely tax-free.
If you are a member of the U.S. armed forces and these tax breaks apply to you, you owe it to yourself and to your family to lower your tax burden in whatever way the law allows. Any professional accountant should know to take advantage of these policies. If you hire an accountant to handle your tax return, make sure that he or she does so.
Combat Zones
Military personnel who are serving in combat zones can take a combat zone tax exclusion. While a tax exclusion is not technically the same as a tax deduction, it is virtually the same in practice. During the time in which a member of the armed forces serves in a combat zone, all pay he receives from the military for that month is exempt from all federal income tax. Service in a combat zone for even one day out of a month makes a service member eligible for a tax exclusion for that entire month.
State Taxes
In addition to federal income tax, many states levy their own income taxes on their residents. This can become problematic for servicemembers and their families when the spouse of a service member works in a state other than the one where the active duty servicemember claims residence. To protect servicemembers and their families, the federal government has instituted the Servicemember's Civil Relief Act. This act ensures that spouses in such situations do not have to pay income tax for both states.
Child Care
When military personnel are deployed, they may have an increased need to pay for child care, especially if they are single parents. In such circumstances, such military personnel can take advantage of a child care tax credit, which accounts for the costs that working people incur by sending their children to daycare or by putting them into the care of babysitters at home. You can claim a credit of up to $3,000 in expenses for one child or up to $6,000 in total expenses for multiple children.
Death Gratuity
If a military member perishes while in active duty, his family is eligible to receive a death gratuity from the federal government. The purpose of this payment is to help the family deal with the economic hardships stemming from such loss of life. Although this gratuity payment comes as a direct result of the military member's professional service, it comes completely tax-free.
If you are a member of the U.S. armed forces and these tax breaks apply to you, you owe it to yourself and to your family to lower your tax burden in whatever way the law allows. Any professional accountant should know to take advantage of these policies. If you hire an accountant to handle your tax return, make sure that he or she does so.