Taxable Military Income

If you’re in the military, there are are specific rules about what you must report to the IRS as income.

Unless you received payment for service in a combat zone, include these items in your reported gross income:

• Basic pay:
  • Active duty
  • Attendance at designated service school
  • Back wages
  • Drills
  • Cost-of-living allowances in the continental United States
  • Reserve training
  • Training duty
• Special pay:
  • Aviation career incentives
  • Career sea
  • Diving duty
  • Foreign duty outside the 48 contiguous states and District of Columbia
  • Foreign language proficiency
  • Hardship duty
  • Hostile fire or imminent danger
  • Medical and dental officers
  • Nuclear-qualified officers
  • Optometry
  • Pharmacy
  • Special-duty assignment pay
  • Veterinarian
  • Special compensation for assistance with activities of daily living (SCAADL)
  • Voluntary separation incentive
• Bonuses:
  • Career status
  • Enlistment
  • Officer
  • Overseas extension
  • Reenlistment
• Incentive pay:
  • Submarine
  • Flight
  • Hazardous duty
  • High altitude/low opening (HALO)
• Other payments:
  • Accrued leave
  • Personal money allowances paid to high-ranking officers
  • Student loan repayment from programs like the Department of Defense Educational Loan Repayment Program — only when the required year’s service isn’t spent in a combat zone
  • High-deployment per diem

You also can’t exclude personal use of a government-provided vehicle.

Military taxpayers who receive tax-free combat pay can continue to include it as earned income for purposes of:

• Earned Income Credit (EIC)
• Additional child tax credit

To learn more, see these tax tips:

• Military Income Exclusions
• Combat Zone Exclusions
• Military Moving Expenses
• Military Extensions