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Combat Pay and Rebates

Updated: 8/08/2008
Article ID: 6216

Troops serving in combat zones typically receive pay that is nontaxable and does not need to be reported on tax returns.

However, service members can use nontaxable combat pay to qualify for a rebate, also known as a stimulus payment, by filing a 2007 tax return. The qualifying income must be $3,000 or more.

Nontaxable combat pay also counts toward the Earned Income Tax Credit for those who qualify. See this article on the credit for more information.

 

If I receive combat pay, how should I file?

Use TurboTax. Most likely our Free Edition product will be your best choice. It was designed for people who normally don't need to file a tax return, and are filing just to receive a rebate.

There is no cost if you file only a federal tax return.

File before Oct. 15 to receive your rebate by Dec. 31, 2008.

How much will I get?

Assuming you qualify, you or you and your spouse had nontaxable combat pay of more than $3,000, you will get at least $300 per person, or $600 per couple, plus $300 per child age 16 or younger as of Dec. 31, 2007.

IMPORTANT: What if I had combat pay but won't be getting a rebate?

Some service members could need to file an amended 2007 return so their nontaxable combat pay can be applied toward a rebate. You might need to amend if all three circumstances below apply:

  • You filed a tax return, but did NOT get a rebate 
  • You were unable to qualify for the Earned Income Tax credit
  • You were unable to get a rebate without reporting your nontaxable combat pay.

This set of circumstances will apply only to a small percentage of service members.

An exception for military families

While most tax filers, their spouses and children must have valid Social Security numbers to qualify for rebates, members of the armed services have been given a special exemption.

If you are a member of the military with a Social Security number, married to a foreigner with an ITIN (Taxpayer Identification Number) and you file a joint return, you will not be disqualified from receiving a rebate.  But your children must have valid Social Security numbers to be eligible as qualifying children.

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