State bonus payments.(p2)
Bonus payments made by a state (or a political subdivision thereof) for service in a combat zone may not be taxable. See State bonus payments
, later under Gross Income
Earned income credit.(p2)
The maximum amount of income you can earn and still claim the earned income credit has increased. You may be able to take the credit if you earned less than $38,646 ($41,646 for married filing jointly) if you have two or more qualifying children; $33,995 ($36,995 for married filing jointly) if you have one qualifying child; and, $12,880 ($15,880 for married filing jointly) if you do not have any qualifying children. See Earned Income Credit,
later, under Credits.
Standard mileage rate.(p2)
The standard mileage rate for the cost of operating your car for business use in 2008 is 50.5 cents a mile (58.5 cents a mile after June 30, 2008). The standard mileage rate for operating your car during 2008 to get medical care or to move is 19 cents a mile (27 cents a mile after June 30, 2008).taxmap/pubs/p3-000.htm#en_us_publink100095939
Recovery rebate credit.(p2)taxmap/pubs/p3-000.htm#en_us_publink100095941
Change of address.(p2)
If you change your mailing address, be sure to notify the Internal Revenue Service (IRS) using Form 8822, Change of Address. Mail it to the Internal Revenue Service Center for your old address. (Addresses for the Service Centers are on the back of the form.)taxmap/pubs/p3-000.htm#en_us_publink100095942
Third party designee.(p2)
You can check the Yes box in the Third Party Designee area of your return to authorize the IRS to discuss your return with a friend, family member, or any other person you choose. This allows the IRS to call the person you identified as your designee to answer any questions that may arise during the processing of your tax return. It also allows your designee to perform certain actions. See your income tax package for details. taxmap/pubs/p3-000.htm#en_us_publink100095943
Photographs of missing children.(p2)
The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.
This publication covers the special tax situations of active members of the U.S. Armed Forces. It does not cover military pensions or veterans' benefits or give the basic tax rules that apply to all taxpayers. For information on military pensions or veterans' benefits, see Publication 525, Taxable and Nontaxable Income. If you need the basic tax rules or information on another subject not covered here, you can check our other free publications. See Publication 910, IRS Guide to Free Tax Services, for a list and descriptions of the different tax publications.
For federal tax purposes, the U.S. Armed Forces includes commissioned officers, warrant officers, and enlisted personnel in all regular and reserve units under control of the Secretaries of the Defense, Army, Navy, and Air Force. The U.S. Armed Forces also includes the Coast Guard. It does not include the U.S. Merchant Marine or the American Red Cross.
Members serving in an area designated or treated as a combat zone are granted special tax benefits. In the event an area ceases to be a combat zone, the IRS will do its best to notify you. Many of the relief provisions will end at that time.taxmap/pubs/p3-000.htm#en_us_publink1000124855
We welcome your comments about this publication and your suggestions for future editions.
You can write to us at the following address:
Internal Revenue Service
Individual Forms and Publications Branch
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224
We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence.
You can email us at *email@example.com
. (The asterisk must be included in the address.) Please put "Publications Comment" on the subject line. Although we cannot respond individually to each email, we do appreciate your feedback and will consider your comments as we revise our tax products.
to download forms and publications, call 1-800-829-3676, or write to the address below and receive a response within 10 days after your request is received.
Internal Revenue Service
1201 N. Mitsubishi Motorway
Bloomington, IL 61705-6613
If you have a tax question, check the information available on www.irs.gov
or call 1-800-829-1040. We cannot answer tax questions sent to either of the above addresses.
You may want to see:
Publication 54 Tax Guide for U.S. Citizens and Resident Aliens Abroad 463 Travel, Entertainment, Gift, and Car Expenses 501 Exemptions, Standard Deduction, and Filing Information 503 Child and Dependent Care Expenses 505 Tax Withholding and Estimated Tax 516 U.S. Government Civilian Employees Stationed Abroad 519 U.S. Tax Guide for Aliens 521 Moving Expenses 523 Selling Your Home 525 Taxable and Nontaxable Income 527 Residential Rental Property 529 Miscellaneous Deductions 553 Highlights of 2008 Tax Changes 559 Survivors, Executors, and Administrators 590 Individual Retirement Arrangements (IRAs) 596 Earned Income Credit (EIC) 970 Tax Benefits for Education 3920 Tax Relief for Victims of Terrorist Attacks Form (and Instructions) 1040X: Amended U.S. Individual Income Tax Return 1310: Statement of Person Claiming Refund Due a Deceased Taxpayer 2848: Power of Attorney and Declaration of Representative 3903: Moving Expenses 4868: Application for Automatic Extension of Time To File U.S. Individual Income Tax Return 8822: Change of Address 9465: Installment Agreement Request taxmap/pubs/p3-000.htm#en_us_publink100095947
See How To Get Tax Help,
near the end of this publication, for information about getting IRS publications and forms.
Members of the Armed Forces receive many different types of pay and allowances. Some are included in gross income while others are excluded from gross income. Included items (Table 1) are subject to tax and must be reported on your tax return. Excluded items (Table 2) are not subject to tax, but may have to be shown on your tax return.
Table 1. Included Items
These items are included in gross income, unless the pay is for service in a combat zone.
|Basic pay||• Active duty|| ||Bonuses||• Career status|
| ||• Attendance at a designated service school|| || ||• Enlistment |
| ||• Back wages|| || ||• Officer|
| ||• CONUS COLA|| || ||• Overseas extension|
| ||• Drills || || ||• Reenlistment |
| ||• Reserve training|| || || |
| ||• Training duty || || || |
| || || ||Other payments ||• Accrued leave|
|Special ||• Aviation career incentives || || ||• High deployment per diem|
|pay||• Career sea|| || ||• Personal money allowances paid to|
| ||• Diving duty || || || high-ranking officers |
| ||• Foreign duty (outside the 48 contiguous|| || ||• Student loan repayment from programs |
| || states and the District of Columbia) || || || such as the Department of Defense|
| ||• Foreign language proficiency|| || || Educational Loan Repayment Program|
| ||• Hardship duty|| || || when year's service (requirement) is not|
| ||• Hostile fire or imminent danger || || || attributable to a combat zone|
| ||• Medical and dental officers || || || |
| ||• Nuclear-qualified officers || ||Incentive pay||• Submarine|
| ||• Optometry || || ||• Flight|
| ||• Pharmacy|| || ||• Hazardous duty|
| ||• Special duty assignment pay || || ||• High altitude/Low altitude (HALO)|
| ||• Veterinarian|| || || |
Any death gratuity paid to a survivor of a member of the Armed Forces is nontaxable.taxmap/pubs/p3-000.htm#en_us_publink100095949
Payments made under the Homeowners Assistance Program (HAP) generally are excluded from income. However, the excludable amount cannot be more than the following limit:
- 95% of the fair market value of the property for which the payments were made, as determined by the Secretary of Defense before public announcement of intent to close all or part of the military base or installation, minus
- The fair market value of the property as determined by the Secretary of Defense at the time of sale.
Any part of the payment that is more than this limit is included in income.
Bonus payments made by a state (or a political subdivision thereof) to a member or former member of the uniformed services of the United States or to a dependent of such member are considered combat pay (and therefore may not be taxable) if the payments are made only because of the member's service in a combat zone. See Combat Zone
, later, for a list of designated combat zones.
If you received nontaxable bonus payments in an earlier year and reported them as taxable income, you may be able to amend your return for that year to claim a refund of the tax you paid on the bonus payment. Use Form 1040X to claim the refund. Generally, you can file an amended return within 3 years after you filed your original return or 2 years from the time you paid the tax, whichever is later.
A QRD is a distribution to an individual of all or part of the individual's balance in a cafeteria plan or health flexible spending arrangement if:
- The individual was a reservist who was ordered or called to active duty for more than 179 days or for an indefinite period, and
- The distribution is made no sooner than the date the reservist was ordered or called to active duty and no later than the last day reimbursements could otherwise be made under the arrangement for the plan year which includes the date of the order or the call to duty.
A QRD made on or after June 18, 2008, is included in gross income and is subject to employment taxes. The employer must include the QRD (reduced by after-tax contributions to the health flexible spending arrangement) as wages on Form W-2.
If you are a U.S. citizen with income from sources outside the United States (foreign income), you must report all of that income (except for amounts that U.S. law allows you to exclude) on your tax return. This is true whether you reside inside or outside the United States and whether or not you receive a Form W-2, Wage and Tax Statement, or a Form 1099. This applies to earned income (such as wages and tips) as well as unearned income (such as interest, dividends, capital gains, pensions, rents, and royalties).
Certain taxpayers can exclude income earned in foreign countries. For 2008, this exclusion amount can be as much as $87,600. However, the foreign earned income exclusion does not apply to the wages and salaries of military and civilian employees of the U.S. Government. Employees of the U.S. Government include those who work at United States Armed Forces exchanges, commissioned and noncommissioned officers' messes, Armed Forces motion picture services, and similar personnel. Other foreign income earned by military personnel or their spouses may be eligible for the foreign earned income exclusion. For more information on the exclusion, see Publication 54.
Residents of American Samoa may be able to exclude income from American Samoa. This possession exclusion does not apply to wages and salaries of military and civilian employees of the U.S. Government. If you need information on the possession exclusion, see Publication 570, Tax Guide for Individuals With Income From U.S. Possessions.
Table 2. Excluded Items
The exclusion for certain items applies whether the item is furnished in kind or is a reimbursement or allowance. There is no exclusion for the personal use of a government-provided vehicle.
|Living allowances||• BAH (Basic Allowance for Housing). You can deduct mortgage interest and real estate taxes on your home even if you pay these expenses with your BAH || ||Combat zone pay ||• Compensation for active service while in a combat zone or a qualified hazardous duty area.|
Note: Limited amount for officers
| ||• BAS (Basic Allowance for Subsistence)|| || || |
| ||• Housing and cost-of-living allowances|| ||Family ||• Certain educational expenses for|
| || abroad whether paid by the U.S.|| ||allowances|| dependents |
| || Government or by a foreign|| || ||• Emergencies |
| || government|| || ||• Evacuation to a place of safety |
| ||• OHA (Overseas Housing Allowance) || || ||• Separation |
| || || || || |
|Moving ||• Dislocation || ||Death ||• Burial services |
|allowances||• Military base realignment and|| ||allowances||• Death gratuity payments to|
| || closure benefit|| || || eligible survivors |
| || (the exclusion is limited as|| || ||• Travel of dependents to burial site |
| || described beginning on page 3)|| || || |
| ||• Move-in housing || ||Other payments||• Defense counseling |
| ||• Moving household and|| || ||• Disability, including payments received |
| || personal items|| || || for injuries incurred as a direct result|
| ||• Moving trailers or mobile homes || || || of a terrorist or military action|
| ||• Storage || || ||• Group-term life insurance |
| ||• Temporary lodging and|| || ||• Professional education |
| || temporary lodging expenses || || ||• ROTC educational and subsistence|
| || || || || allowances |
|Travel ||• Annual round trip for dependent|| || ||• Survivor and retirement protection|
|allowances|| students || || || plan premiums|
| ||• Leave between consecutive|| || ||• Uniform allowances |
| || overseas tours || || ||• Uniforms furnished to enlisted personnel |
| ||• Reassignment in a dependent|| || || |
| || restricted status|| ||In-kind military ||• Dependent-care assistance program |
| ||• Transportation for you or your|| ||benefits||• Legal assistance |
| || dependents during ship overhaul|| || ||• Medical/dental care |
| || or inactivation || || ||• Commissary/exchange discounts|
| ||• Per diem || || ||• Space-available travel on|
| || || || || government aircraft|
The pay you earn as a member of the Armed Forces may be subject to community property laws depending on your marital status, your domicile, and the nature of the payment. The community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.taxmap/pubs/p3-000.htm#en_us_publink100095952
Community property rules apply to married persons whose domicile during the tax year was in a community property state. The rules may affect your tax liability if you file separate returns or are divorced during the year.taxmap/pubs/p3-000.htm#en_us_publink100095953
Your domicile is the permanent legal home you intend to use for an indefinite or unlimited period, and to which, when absent, you intend to return. It is not always where you presently live.taxmap/pubs/p3-000.htm#en_us_publink100095954
Active duty military pay is subject to community property laws. Armed Forces retired or retainer pay may be subject to community property laws.
For more information on community property laws, see Publication 555, Community Property.