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Military Tax Return Filing and Extensions

Updated for Tax Year 2021 / October 16, 2021 03:30 AM


OVERVIEW

U.S. military service members have access to a number of extensions, deferments, and other benefits when it comes to their taxes.


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military family taking a selfie

Members of the United States armed forces are often deployed outside of their home state or country when tax time rolls around. This can make it difficult to file a military tax return or make payments on time. The IRS recognizes this fact and gives many military and support personnel an extension on their tax deadlines.

Which military tax return deadlines can be extended?

Some members of the military, including those serving in a combat zone, can postpone certain tax deadlines.

Filing tax returns and making tax payments

If you're in the United States, you can get an extra six months to file a federal income tax return by submitting IRS Form 4868 before the filing deadline. However, if you owe taxes, the IRS will charge interest from the date the payment was due unless you make your payment by the original filing deadline.

Military members on active duty outside of the U.S. or Puerto Rico qualify for an automatic two-month extension — no need to file Form 4868. This pushes the filing deadline back to June 15. To receive this extension, you must attach a statement to your tax return explaining your situation and how you qualify. But, if you owe tax, the IRS will still charge interest and late payment penalties from the regular due date onward.

If you can't file by June 15, you can request an additional four-month extension using Form 4868. You may also be able to request an extra two-month discretionary extension, which pushes your filing deadline back to December 15. To request the discretionary two-month extension, you must send a letter to the IRS by October 15. The letter should explain why you need extra time to file.

The IRS will only send a response if it denies your request for extra time.

Military members serving in a combat zone or contingency operation qualify for an automatic extension, which will extend the deadline to file a return, pay taxes owed, or file a claim for a refund. You also qualify for an extension if you're hospitalized outside of the U.S. due to injuries sustained in a combat zone or hazardous duty area.

To calculate the extension, count 180 days after:

  • You leave the eligible area
  • The area is no longer designated as a combat zone
  • The operation is no longer considered a contingency operation
  • You're no longer hospitalized

Add the number of days you had left to file when you began qualifying service.

For example, if you began serving in a combat zone on April 1, you had 15 days until the typical April 15 filing deadline. That means you would have 195 days from your last day of service to file your return and pay any taxes due, or 180 days plus the 15 remaining from April 1 to April 15.

As long as you pay your tax in full by the end of this deferral period, the IRS won't charge interest or penalties.

Combat zones are areas where the Armed Forces have engaged or are engaging in combat. Areas are designated as combat zones by executive order. Contingency operations are designated by the secretary of defense or by a call to duty that results from Congress or the president declaring war or a national emergency.

If you qualify for an extension, your spouse and dependents also qualify. You don't have to file a joint return; your spouse will qualify even if you file separate returns.

Contributing to an IRA

Typically, you have until April 15 of the current tax year to contribute to a Traditional or Roth IRA for the previous year. For example, you have until April 15, 2022, to make a 2021 IRA contribution.

Suppose you're serving in a combat zone or contingency operation, or you're hospitalized. In that case, the IRS can extend your deadline to make an IRA contribution to 180 days after you leave the combat zone, the area is no longer designated as a combat zone, or you're no longer on a contingency operation.

Responding to IRS notices and inquiries

Military members serving in a combat zone or contingency operation can also get more time to deal with IRS notices, including collections and audits. To request more time, return the IRS notice with the words "COMBAT ZONE" in red on the notice and on the envelope.

You can also prevent such notices from going out by emailing the IRS and providing your name, stateside address, date of birth, and deployment date to the combat zone. Be sure to attach an official document indicating your area of military operation. Don't include your Social Security number in the email.

Military service that qualifies for extensions

Members of all branches of the U.S. Armed Forces can qualify for these extensions, including:

  • Active duty and Reserve Army, Navy, Marine Corps, and Air Force
  • Active duty and Reserve U.S. Coast Guard
  • The Army National Guard, National Air Guard, and the Ready Reserve Corps of the Public Health Service
  • Red Cross personnel, accredited correspondents, and civilian personnel acting under the direction of the Armed Forces, serving in a combat zone or contingency operation in support of the U.S. Armed Forces

Veterans and members of the U.S. Merchant Marines don't qualify for these tax extension benefits.

Other tax breaks for military members

Extensions aren't the only tax benefits the federal government provides for those who serve in the military. There are some other breaks you might find useful.

Deductible moving expenses

The Tax Cuts and Jobs Act of 2017 eliminated the deduction for moving expenses for most taxpayers, but not for active-duty military members.

Those who relocate due to a permanent change of situation can deduct unreimbursed moving expenses, including:

  • Moving household goods and personal effects
  • Storing and insuring household goods and personal effects within any period of 30 consecutive days between moving items out of your former home and delivering them to your new home
  • Lodging, car expenses, or airfare while traveling from your old home to your new home

Deductible travel expenses

Members of the Armed Forces Reserve who travel more than 100 miles away from home for reserve-related duties can deduct their unreimbursed travel expenses from when they leave home until they return home.

Excluding certain compensation from taxable income

Military members serving in a designated combat zone or serving in direct support of military operations in a combat zone can include income during that period from their federal taxable income, but not Social Security and Medicare taxes. This includes:

  • Active duty pay while serving in a combat zone
  • Imminent danger/hostile fire pay
  • Reenlistment bonuses if you reenlist while serving in a combat zone
  • Pay for selling back leave while serving in a combat zone

For enlisted members, the exclusion from federal income tax is unlimited. For officers, the exclusion is limited to the maximum amount of enlisted pay.  You can also exclude military allowances for housing from your federal taxable income.

Service members may also elect to include nontaxable combat pay in order to maximize their Earned Income Credit. If you decide to take this option, you must report all of the nontaxable combat pay you received as earned income. But, including combat pay will likely only increase your Earned Income Credit if your earned income before combat pay is less than the following amounts:

  • $7,000 if you have no children
  • $10,500 if you have one child
  • $14,800 if you have two or more children

Keep in mind that the rules for taxing military pay vary by state. Some states don't charge income tax on active duty pay, retired military pay, or survivor benefits. Some states follow the federal tax rules, and some cap the exclusion at a certain dollar amount. If you prepare your return in TurboTax, the software will help you take advantage of any state income tax exclusions you qualify for.

Enlisted active duty and reserve military can use TurboTax Online for free

In honor of our nation's military personnel, all enlisted active duty and reserve military can file free extensions and federal and state tax returns with TurboTax Online using the TurboTax Military Discount. TurboTax easily handles military tax situations, including:

  • Excluding combat pay, Basic Allowance for Subsistence (BAS), and Basic Allowance for Housing (BAH)
  • Finding every deduction for military-related expenses you deserve
  • Completing a permanent change of situation (PCS) — TurboTax will determine your state of residence

Simply start your TurboTax Online return and use your military W-2 to verify your rank, and your savings will be applied when you file if you’re eligible.

Remember, with TurboTax, we'll ask you simple questions about your life and help you fill out all the right tax forms. With TurboTax you can be confident your taxes are done right, from simple to complex tax returns, no matter what your situation.


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