Will I Have to Pay Income Taxes?

All Americans, even servicemembers, must pay income taxes. However, if you are serving in a designated combat zone or hazardous duty area, your income taxes are not due by April 15. You automatically have at least 180 days longer to file your return and pay your taxes.

Also, combat zone pay is not subject to income taxes. That’s the good news. Until recently, the possible bad news was that combat zone pay did not count as earned income for the Earned Income Tax Credit (EITC). That meant that, if excluding combat pay from your income left you with no earned income, you could not claim an EITC refund. That could cost you hundreds or even thousands of dollars.

However, in tax year 2007, you have the option to include combat pay as earned income for purposes of figuring the EITC. It’s a good idea to figure the credit with and without combat pay.

Also, combat pay can be treated as taxable earned income to help servicemembers claim the Child Tax Credit. Contact your income tax preparer or base finance office for help with these tax issues. You can also reach the IRS through its Web site, military-only e-mail address, combatzone@irs.gov, or its help line at 1-800-829-1040.