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
More information about Tax Relief
for Those Affected by Operation Joint Guard can be found at http://www.dfas.mil/money/milpay/not96-34.htm. Entitlements and benefits for military personnel deployed
for Operation Joint Guard can also be found at http://www.dfas.mil/money/milpay/oje_ents.htm.
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
Forms To Be Available Online
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
http://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 http://www.military.com/Resources/ResourceFileView?file=Active_Duty_Pay.htm.
Tax Break from Uncle Sam
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 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