If you're in the Armed Forces, there are several special tax benefits that apply to you. First, you may be eligible for a combat zone exclusion… which means some or all of your combat pay could be tax free. However. . . you may choose instead to include tax-free combat pay in your earned income when you file your taxes to claim the Earned Income Tax Credit. This could get you a larger refund. So, figure the credit with and without your combat pay and make the choice that's best for you. Also… if you transfer to a new duty station… you may be able to deduct unreimbursed moving expenses. If the military reimburses you for those expenses… you don't need to pay tax on that amount. Here's another. If you're a reservist and your duties take you more than 100 miles from home… you can typically deduct unreimbursed travel expenses. For more information about these tax benefits, head over to IRS.gov/military.
