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Tax season can leave soldiers confused.

"THE hardest thing in the world to understand is income tax." Albert Einstein was not joking when he spoke those words. Tax season can be stressful for many families trying to do their taxes and make heads or tails out of a number of confusing provisions. Taxes for Soldiers can be even more confusing because there are several tax provisions that are different for the military, especially for Soldiers who spent time in a combat zone.


The Earned Income Credit and the Child Tax Credit are two of those complicated provisions. These credits are different because the government will pay you the credit regardless of whether or not you owe tax or are due any other refund.

The EIC is designed to help low-income earners who have children. If you have one eligible child and earn less than $33,995, you could receive as much as $2,917 in EIC. If you have two or more eligible children and earn less than $38,646, you could receive as much as $4,824 in EIC. For purposes of EIC, earned income means income that is subject to tax. For Soldiers, that does not include BAH, BAS or other nontaxable allowances. An eligible child is a child (including stepchild, grandchild or adopted child) who lives at least half the year in your home, and is under the age of 19 (or under age 24 and a full-time student).


The CTC is a $1,000 credit for each eligible child claimed on your tax return as a dependent. An eligible child for the CTC is a child under the age of 17. Unlike the EIC, the CTC is not just for low-income earners; the CTC is not reduced unless you make more than $110,000 if married filing a joint return or over $75,000 if you are single.

Even Soldiers who serve in combat areas where their military pay is excluded from tax can qualify for these credits thanks to a provision of law that applies only to military members. The law works slightly differently for each credit, but to the advantage of the Soldier.

An enlisted Soldier who went to a combat zone in January and served a full 12-month tour would get a W-2 for the year showing zero earned income. If that Soldier has eligible children, they may still qualify for EIC by electing to include the combat zone tax-excluded income on their tax return for purposes of the EIC only. Making this election does not mean you are paying tax on that money, it only means that you are using the amount to qualify for the EIC you would have been eligible for if you had not been in a combat zone. If a married couple both served in the combat zone, each makes the election for EIC purposes, which allows them to maximize their EIC. Soldiers who want to make this election need only look at box 12 of the W-2 and the amount of their combat zone tax excluded income will be printed there with a "Q" next to it.

This same provision of law requires that the combatzone, tax-excluded income be included for purposes of the CTC instead of allowing the Soldier to elect to include it. This allows a Soldier who elects not to include the income for EIC to still qualify for CTC, and allows a dual-military couple to maximize their CTC even if they both elect not to include combat zone excluded income for EIC purposes.

Fortunately, Soldiers do not have to struggle alone through the complications of tax preparation and eligibility for valuable tax credits. Installation tax centers have trained preparers who understand the requirements and intricacies of these credits and other tax provisions, and have the up-to-date tax software to accurately prepare and electronically file your taxes. There is no charge for services provided at the installation tax center. If you need information regarding your installation tax center call the Legal Assistance Office at your local Staff Judge Advocate Office.
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Title Annotation:Legal Forum: The Legal Assistance Policy Division
Publication:Soldiers Magazine
Geographic Code:1USA
Date:Mar 1, 2009
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