Question: How Is Taxable Combat Pay Calculated?

Where do I find combat pay on w2?

The combat pay is not taxable, but it’s shown on your husband’s W-2, here in box 12, with Code Q.

I will enter that into the system with the rest of the W-2 information because combat pay can increase some tax credits..

What is combat pay on w2?

If you are a member of the U.S. Armed Forces who serves in a combat zone, you may exclude certain pay from your income. You do not actually need to show the exclusion on your tax return because income that qualifies for the exclusion is not included in the wages reported on your Form W-2.

What is taxable combat pay?

Combat pay is a bonus paid to military service personnel who are serving in regions that are designated hazard zones. The additional pay is generally not subject to federal income tax although Social Security and Medicare taxes are deducted.

Is Bah tax free?

While all pays are taxable, most allowances are tax-exempt. The primary allowances for most individuals are BAS and BAH, which are tax-exempt. … Tax savings can be significant as BAS and BAH averages over 30% of a member’s total regular cash pay.

What is taxable combat pay included in AGI?

The balance of income is included in the W-2, Box 1, and therefore is included in the AGI. (This “taxable” combat pay is the amount that is to be excluded from income.) The highest level of enlisted pay is for an E-9.

Is leave earned in a combat zone tax free?

CZTE leave for enlisted members is exempt from Federal income tax. … All leave earned during a month in which a member serves for any period of time in a combat zone or qualified hazardous duty area is CZTE leave.

What is considered non taxable combat pay?

Combat Pay You do not have to report nontaxable pay you receive as a member of the Armed Forces as earned income for purposes of the EITC. Examples of nontaxable military pay are combat pay, the Basic Allowance for Housing (BAH), and the Basic Allowance for Subsistence (BAS).

Where do I find combat pay on 1040?

Combat pay or special combat pay. Only enter the amount that was taxable and included in your adjusted gross income. Don’t include untaxed combat pay. Parents, be sure to report Education Credits that may appear on the tax return (1040: Line 50) & (1040A: line 33).

What is box 12a on a w2?

The W2 Box 12 codes are: A — Uncollected Social Security or RRTA tax on tips. … C — Taxable costs of group-term life insurance over $50,000 (included in W-2 boxes 1,3 (up to Social Security wages base), and box 5. D — Elective deferral under a 401(k) cash or arrangement plan.

How does combat pay affect taxes?

Generally, any form of military pay earned while on deployment in a combat zone is excluded from federal income tax. … Any form of pay earned while on deployment in a combat zone is excluded from federal income tax.

How much will I make on deployment?

The most common extra pays and allowances during deployment include: Family Separation Allowance starts after 30 days: $8.33 per day, up to $250 per month. Hardship Duty Pay for location or mission: $50, $100, or $150 per month.

What qualifies as a combat zone?

The term “combat zone(s)” is a general term used on IRS.gov and includes all of the following hostile areas where military may serve: actual combat areas, direct combat support areas, and qualified hazardous duty areas.

Is combat pay considered earned income?

Combat pay is exempt from income taxes, thus providing military personnel with additional compensation for serving in dangerous areas. 2 Prior to 2005, combat pay was not counted as earned income for the purposes of calculating the EITC.

Do you want to include your combat pay in your income?

You do not have to, but it may help you for the Earned Income Tax Credit. … If you make the election, you must include in earned income all nontaxable combat pay you received. The amount of your nontaxable combat pay should be shown on your Form W-2 in box 12 with code Q.

Is Kuwait considered a combat zone for taxes?

The following countries are currently recognized as combat zones: Afghanistan, Iraq, Syria, Kuwait, Saudi Arabia, Oman, Bahrain, Qatar, Jordan, United Arab Emirates and Yemen. … The Internal Revenue Service with help from the Department of Defense identifies taxpayers who are serving in a combat zone.

Is military hazard pay taxable?

Members who qualify for incentive pay for more than one type of hazardous duty may receive no more than two payments for the same period. Hazardous duty incentive pay is not taxable.

What is college grant and scholarship aid reported to the IRS as income?

College grant and scholarship aid reported to the IRS: Check the box if you received outside scholarship/grant sources. This is not a scholarship offer that a college will offer to you whether merit or need-based. You can find this figure on your tax return as a deduction as part of your Adjusted Gross Income.

How do you calculate combat pay?

Your nontaxable combat pay is listed on Form W-2, box 12, with code Q. But you and your spouse can each choose to count your nontaxable combat pay as earned income to qualify for the Earned Income Tax Credit.

What is considered combat pay?

Combat pay is a tax-exempt monthly stipend paid to all members of the Armed Services who are serving in designated hazardous zones. It is paid in addition to the person’s basic pay. Combat pay is not open only to combat soldiers.