This video was published by the IRS.
Did you know some special tax benefits apply to members of the Armed Forces? You may be eligible for a combat zone exclusion, which means some or all of your combat pay could be tax-free. The exclusion also applies if you are hospitalized due to a combat zone injury.
However, you may choose instead to include tax-free combat pay in your earned income to help figure the Earned Income Tax Credit. This could get you a bigger refund. But before choosing, figure the credit with and without your combat pay to see which is better for you.
Also, if you transfer to a new duty station, you may be able to deduct unreimbursed moving expenses. And if the military reimburses you for those expenses, you don’t need to pay tax on that amount.
Another thing, if you’re a reservist and your duties take you more than 100 miles from home, you can typically deduct unreimbursed travel expenses.
Keep in mind, you can get more time to file your taxes if you’re stationed overseas or serving in a combat zone. Find more information in the publication called “The Armed Forces Tax Guide,” which you can find at IRS.gov/military.