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Combat exclusionsIf you served in a combat zone last year, you qualify for combat zone military pay exclusions, said Col. Albert W. Klein Jr., 18th Wing staff judge advocate.

If you’re in a combat zone for one day, then that whole month qualifies for whichever exclusion you rate, he said.

According to the Internal Revenue Service, enlisted troops and warrant officers can exclude all military pay received for that month from their gross income. For commissioned officers, the monthly exclusion is capped at the highest enlisted pay, plus any hostile fire or imminent danger pay received.

Klein said time spent in combat zones is stated on your W2.

“If there is a discrepancy about how much time you were in a combat zone, then you have to work it out with your military finance unit,” he said.

Volunteers ready to helpOnce you’re ready to file, tax advisers at Pacific bases say, you should take advantage of the preparation services offered by Volunteer Income Tax Assistance.

The VITA program provides free tax preparation and electronic tax filing for all servicemembers, Department of Defense civilians and status-of-forces-agreement employees. The only exception: someone with taxable income from self-employment. Regulations governing VITA prevent advisers from helping such persons, said tax adviser Elaine Reeves.

VITA personnel are trained to help servicemembers with some special tax situations, such as how to file when you or your spouse earn money off base in a foreign country.

“From whatever source, however derived, anywhere in the world, wherever you earned income, it’s taxable by Uncle Sam,” said Col. Albert W. Klein Jr., 18th Wing staff judge advocate.

If you already paid a foreign tax on the income, then you will be able to get a credit, he said.

Income earned by foreign-born spouses also must be claimed, Reeves said.

Even if a spouse earns income off base and pays non-U.S. income tax, the servicemember still must report the income on his or her return, Reeves said.

However, the IRS isn’t trying to double-tax you; you would file this as an exclusion or request a tax credit for the income, she said.

Documentation needed to file taxes at a VITA center includes a Social Security number for all taxpayers and family members, all W2s, voided checks for the account to receive your refund and bank statements for yearly interest earned, Reeves said.

Army Lt. Col. Timothy M. Tuckey, with the 10th Area Support Group staff judge advocate, said VITA also can help families with newborns for whom they’ve not yet acquired Social Security numbers.

People with children also need to bring child care bills and their child care provider’s Social Security or employer ID number, said Reeves, adding that people can claim off-base child care expenses but will need the name of the person or center, address and total foreign-currency payment.

People who own homes stateside that they rent out will need to bring additional paperwork showing 2006 rent received, mortgage and interest paid, property tax and upkeep expenses, Reeves said.

Tuckey said people also need to bring documentation if they sold stocks.

He added that some tax documentation may be difficult to gather due to the slowness of mail overseas. However, he said, much documentation can be gathered online at various institutions’ Web sites.

The bottom line, tax advisers say, is to avoid waiting until the last minute: Complete your income tax return now.

Combat zones

Combat zones designated by a presidential executive order, beginning on the dates listed and including the air space above each:

Persian Gulf, Red Sea, gulfs of Oman and Aden, Arabian Sea north of 10 degrees north latitude and west of 68 degrees east longitude, and Iraq, Kuwait, Saudi Arabia, Oman, Bahrain, Qatar and the United Arab Emirates — Jan. 17, 1991Kosovo area, Federal Republic of Yugoslavia (Serbia and Montenegro), Albania, the Adriatic Sea and the Ionian Sea north of the 39th Parallel — March 24, 1999Afghanistan — Sept. 19, 2001Combat Zones designated by Public Law 104-117, beginning Nov. 21, 1995:Bosnia and HerzegovinaCroatiaMacedoniaThe Defense Department certified the following as combat zones beginning on the dates listed:

Operation Enduring Freedom:

Pakistan, Tajikistan and Jordan — Sept. 19, 2001Incirlik Air Base, Turkey — Sept. 21, 2001 through Dec. 31, 2005Kyrgyzstan and Uzbekistan — Oct. 1, 2001Philippines (only troops with orders referencing Operation Enduring Freedom) — Jan. 9, 2002Yemen — April 10, 2002Djibouti — July 1, 2002Somalia — Jan. 1, 2004Operation Iraqi Freedom:

Turkey — Jan. 1, 2003 through Dec. 31, 2005Israel — Jan. 1 through July 31, 2003Mediterranean Sea east of 30 degrees East longitude — Mar. 19 through July 31, 2003Jordan — March 19, 2003Egypt — March 19 through April 20, 2003The IRS suggests that taxpayers qualifying for combat zone-related extensions e-mail to notify the IRS of their status. Provide name, stateside address, birth date and combat zone deployment date.

Source: IRS


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