Special rules apply when you calculate the Earned Income Tax Credit (EITC) if you’re a: Military member Clergy member or minister Military If you’re a member of the military and claim the EITC, there are 2 additional rules if you: Get nontaxable military pay such as combat pay or a housing allowance or subsistence allowance Were stationed outside the United States Nontaxable military pay If you or your spouse got nontaxable pay as a member of the Armed Forces, you don't have to include it as earned income on your federal taxes. If you and your spouse do choose to include your nontaxable pay as earned income for the EITC, you may owe less tax and get a larger refund. The person who includes your nontaxable pay as earned income must include all of it. Calculate your taxes both ways and choose the one that works the best for you. Use the Qualification Assistant. Nontaxable pay definition Nontaxable pay includes: Combat pay See which areas are Combat Zones See Questions and Answers on more Combat Zones provisions for more information about combat pay The Basic Allowance for Housing (BAH) The Basic Allowance for Subsistence (BAS) To find the amount of your nontaxable combat pay, see your Form W-2, box 12 with code Q. How to include nontaxable pay when you claim the EITC There are 4 ways you can include nontaxable pay when you claim the EITC. You can: Choose to include all your nontaxable pay while your spouse doesn’t include any of their nontaxable combat pay Choose to include none of your nontaxable pay while your spouse includes all their nontaxable combat pay Both choose to include all your nontaxable pay Both choose not to include any of your nontaxable pay For more examples, see Nontaxable Combat Pay in Publication 596, Earned Income Credit. Military personnel stationed outside the United States We consider members of the military on extended active duty outside the Unites States to have their main home in the United States for tax purposes. For a definition of extended active duty, see Publication 596, Earned Income Credit. Clergy member or minister If you are a clergy member or minister, you must: Include the rental value of the home you live in, or the housing allowance, if it was provided to you by the church Include income you get for working as a minister if you are an employee Ministers' housing If the church provided housing to you as part of your minister’s pay, you should include the rental value of the home or housing allowance as part of your earned income from self-employment for the EITC. The rental value of the home is the money the church would get if they charged you rent. If you have an approved Form 4361 or Form 4029, you do not need to do this. What counts as income for a minister You may file a request for your income to be exempt from Social Security taxes. These forms are: Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners Employee minister income Even if you have an approved form to exempt your income from Social Security taxes, if you get income for working as a minister who is an employee, count it as earned income. This income includes: Wages Salaries Tips Other taxable employee compensation To calculate your earned income, don’t subtract losses on Schedule C, C-EZ or F from wages reported on lines 1a through 1h of Form 1040 or 1040-SR. Non-employee minister income If you get income for working as a minister who is not an employee, don’t count it as earned income. This income includes: Self-employed wages Fees for performing marriages Honoraria for delivering speeches For more information about ministers and earned income, see Publication 596, Earned Income Credit. Resources Qualification Assistant Disability and the EITC
