Tax Information

TAX INFORMATION

Members of the National Guard receive a W-2 Form each year showing the total amount of taxable wages for the previous year, total federal and state income tax withheld, and total Social Security taxes withheld from pay received for National Guard duty. National Guard members whose civilian employers pay them the difference between their National Guard pay for annual active duty for training and their civilian pay for that period may end up being taxed twice. The civilian employer may report as taxable income the full salary for the two-week period without reducing the amount for military reimbursement, and DFAS will deduct taxes from the National Guard member’s military pay as well. This can be corrected either by obtaining a corrected W-2 form or reducing the amount of income reported in one’s tax return and including a narrative explanation of the situation. All basic pay (excluding pay received as a stipend for participation in the Armed Forces Health Professions Scholarship Program) and hazardous duty or incentive pay, is taxable. Allowances for BAH and BAS, uniform allowances, meal allowances, and items furnished in kind, such as rations, transportation, and accommodations, are not taxable. Some National Guard members are entitled to a credit on their tax return for excess Social Security tax withheld from their military pay.

USAA at http://www.usaa.com is a good source of information for military members for insurance, banking and tax-deferred investments. If you have any questions about your specific tax situation, you can consult the Military.com Tax Guide, the IRS at http://www.irs.gov, a tax professional or Tax Information For National Guard Members. A copy of the Armed Forces Tax Guide can be found at http://www.irs.gov/pub/irs-pdf/p3.pdf.

More information about Tax Relief for Those Affected by Operation Joint Guard can be found at https://www.guardfamily.org/?line=9090. Entitlements and benefits for military personnel deployed for Operation Joint Guard can also be found at https://www.guardfamily.org/?line=9091.

You can download federal tax forms from the IRS’s Forms and Publications site: http://www.irs.gov/formspubs/index.html. You can also file electronically, using the IRS’s e-file http://www.irs.gov/efile/index.html system or by using one of a number of software packages. For more information on filing, see the section Filing Returns in the Armed Forces Tax Guide http://www.irs.gov/pub/irs-pdf/p3.pdf. You can download state tax forms from your state tax agency.

W2 Tax Forms To Be Available Online
Beginning in January 2003, the Defense Finance and Accounting Service will make 2002 W2 tax forms available online through DFAS’ myPay system. A personal identification number is needed to access personal accounts. Service members, retirees and civilian employees who do not remember receiving their PIN or do not remember the number can go to https://www.dfas.mil/, and click on myPay, which is under the “Money Matters” heading. Due to security reasons PINs are mailed to the recipients, and it could take from three to seven days to get the number after the request has been made. Some of the other finance actions that can be performed online to date are: purchasing savings bonds, managing allotments, viewing and printing travel vouchers and leave and earning statements. Customers with questions about myPay can call customer support at 1-800- 3900-2348, Monday through Friday between 7 a.m. and 7:30 p.m. EST. For more about pay and benefits, and a tax guide, see https://www.military.com/Resources/ResourceFileView?file=Active_Duty_Pay.htm.

Tax Break from Uncle Sam
Military members serving in designated combat zones in support of the war against global terrorism get a tax break from Uncle Sam.

Depending upon rank, eligible service members can exclude from federal income tax either all or some of their active duty pay — and certain other pays — earned in any month during service in a designated combat zone.

According to the Internal Revenue Service’s Armed Forces’ Tax Guide for 2002, “a combat zone is any area the President of the United States designates by Executive Order as an area in which the U.S. Armed Forces are engaging or have engaged in combat.”

Current combat zones are Afghanistan, specified parts of the Kosovo area and the Persian Gulf region. The tax guide defines the qualifying areas.

Service members in several other areas specified in law as “qualified hazardous duty areas” are eligible for the same tax breaks. Bosnia-Herzegovina, the Former Yugoslav Republic of Macedonia and Croatia have been listed since November 1995.

Some members providing direct support for military operations within a designated combat zone or qualified hazardous duty area may also be eligible for income tax exclusions. New for 2002 are service in Djibouti, Africa, after July 1, 2002; and service in the Philippines after Jan. 9, 2002, providing members’ orders specify their duty is “in direct support of Operation Enduring Freedom – Philippines.”

Service members who serve one or more days in a designated combat zone are entitled to federal tax exclusion benefits for that entire month, according to the IRS.

The downloadable Armed Forces’ Tax Guide for 2002 http://www.irs.gov/pub/irs-pdf/p3.pdf can be accessed on the Web at www.irs.gov/pub/irs-pdf/p3.pdf. It lists many, but not all, designated combat zones.

While military members can use the tax guide in preparing their 2002 federal tax returns, those who have specific questions about designated combat zones should contact their unit personnel or pay officials or unit tax assistance officer.

The IRS guide notes service members normally don’t need to claim the combat zone exclusion or subtract eligible earning on their federal tax returns. The services normally have already excluded combat zone earnings from the taxable gross income reported on service members’ Form W-2s, the guide says.

The IRS points out that military retired pay and pensions aren’t eligible as combat zone income tax exclusions.