A:

If you are a member of the military, you may be afforded special tax benefits that might not be available to other taxpayers. These include the following:

Automatic Extension
If you are serving in a combat zone, you receive an automatic extension for filing your tax return, paying taxes, filing claims for refunds, making contributions to your IRA and correcting excess contributions to IRAs.

Nontaxable Combat Pay Election
Members of armed forces who served in a combat zone are eligible to exclude certain pay from their income. However, the individual can elect to include those amounts in income for the purpose of receiving the earned income tax credit (EITC). (To read more on this subject, see How can I tell if I'm eligible for an EITC? and Benefits for Members of the Armed Forces.)

Non-Taxable Combat Pay Now Eligible for IRA Contributions
Military personnel who receive nontaxable combat pay while serving in combat zones may make contributions to IRAs based on that compensation. These individuals may also make retroactive contributions for 2004 and 2005 providing the contributions are made by May 28, 2009, and the individual was otherwise eligible to make the contributions. For instance, for Traditional IRA contributions, the individual should be under the age of 70.5 for the year the contribution applies.

Extension for IRS Compliance Actions
The IRS identifies taxpayers who are serving in a combat zone so that compliance actions, such as audits or enforced collections are suspended for those individuals, until 180 days after the taxpayer leaves the zone. To ensure that the IRS is able to identify these individuals a notification should be sent to the IRS by the taxpayer's, his/her spouse, authorized agent or representative to e-mail address combatzone@irs.gov. The e-mail should include the taxpayer's name, state-side address, date of birth and date of deployment to the combat zone. Social security numbers should not be included for security purposes. (See IRS Publication 3 at http://www.irs.gov/ for details.)

To read more frequently asked tax questions, Does everyone have to file a federal tax return?, How can I make sure I'm ready to file my taxes? and Common Tax Questions Answered.

If you feel you will be unable to file your tax return by the deadline, see Get A Six-Month Tax Extension.

Question answered by Denise Appleby, CISP, CRC, CRPS, CRSP, APA

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RELATED TERMS
  1. Combat Zone

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