Tax 101 for deployed Airmen Published Jan. 29, 2009 By Graham H. Bernstein Judge Advocate HILL AIR FORCE BASE, Utah -- Deployments are stressful. The last thing deploying airmen need is the added stresses caused by tax season. With this in mind, the Internal Revenue Service has special benefits for deploying military members designed to keep tax stress to a minimum. This article provides a brief overview of those benefits. First, it is important to determine if you have a right to the IRS deployment benefits. The IRS gives these special benefits to all military members 1) deployed to a combat zone, 2) deployed in direct support of a combat zone, or 3) deployed to a qualified hazardous duty area. If you are in one of these categories for at least one day of a month, then that entire month qualifies for IRS deployment benefits. If you're unsure if your deployment falls into one of these three categories, consult your local JAG office for clarification. Federal Tax Free Military Pay The primary benefit the IRS awards to military members in the three above categories is the right to exclude income made while deployed. Enlisted personnel can exclude all of their basic pay, while officers can exclude their bas pay up to the highest rate of enlisted pay (Chief Master Sergeant of the Air Force). Additionally, there are several other types of military income that are excluded from taxes if paid out during a month a member is deployed. Some examples include, imminent danger/hostile fire pay, dislocation allowances, reenlistment bonuses, and pay for accrued leave. Keep in mind that tax exempt status applies only to the member and not to any income earned by a non-deployed spouse. Tax Filing Extension Another important tax benefit afforded to deployed members is a 180 day extension to tax filing deadlines. A deployed member gets a 180 days plus any days the member had left to file for that year before he deployed. The clock begins the day the member returns from deployment or, if injured while deployed, the last day of continuous hospitalization for the member's injuries. As long as the member files during the extension period no penalties or interest will be charged; the IRS will even pay interest on any applicable refunds. This benefit DOES apply to the spouses of deployed members if they are filing jointly. That is, both a deployed member and their spouse benefit from the 180 day filing extension on jointly filed returns. The 180 day tax filing extension is an automatic benefit and no notification is required until the IRS takes action against the member for failure to file. When IRS action is received, the person receiving the notice simply needs to write "COMBAT ZONE" on the notice and return it to the IRS. Alternatively, the member or spouse can send an email to combatzone@irs.gov, providing within that email the member's name, address, date of birth, and date of deployment. There is no need to provide a social security number in the email. Power of Attorney for Filing Returns If a member chooses to forgo the extension and have a spouse or other person file for them while deployed, they can do so with a power of attorney (PoA). A member can draw up a PoA at the base JAG office or fill out IRS Form 2848, which can be downloaded from the IRS website. Alternatively, a married member's spouse can file jointly without need of a PoA. The spouse need only attach a signed statement to the return explaining that the member is currently deployed to a combat zone. Please note that for security reasons the Hill Air Force Base Tax Center will NOT prepare taxes for a spouse using the signed statement method. The Tax Center will only prepare jointly filed returns for a deployed member if they provide their spouse with a PoA. Death Benefits Finally, the IRS provides special tax forgiveness benefits to the families of members who die while deployed to a combat zone, die from wounds received in a combat zone, die from wounds incurred in a terrorist military action, or for a member who has been formally removed from missing status. The details of this benefit are complex; for more information see your local JAG office. For more information on the tax benefits provided to deployed airmen check the IRS webpage at http://www.irs.gov/individuals/military/index.html or contact your local JAG office at 801-777-6626.