Tax Information

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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 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 Tax Guide, the IRS at, a tax professional or Tax

Information For National Guard Members. A copy of the

Armed Forces Tax Guide can be found at

More information about Tax Relief

for Those Affected by Operation Joint Guard can be found at Entitlements and benefits for military personnel deployed

for Operation Joint Guard can also be found at

You can download federal tax forms

from the IRS’s Forms and Publications site: You can also file electronically, using the IRS’s e-file

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 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, 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

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 –


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 can be accessed on the Web at 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