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Military Tax Benefit: Delayed Actions When In a Combat Zone

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Dealing with the IRS is stressful enough. It can become even more stressful if you or your spouse is in a combat zone. The Government realizes this and those serving in a combat zone have some special exemptions for taking action with the IRS. Taking action can include: filing your taxes, paying any taxes due or responding to an IRS inquiry. One other action worth noting is that you can also delay making your required contribution to an IRA. Here is what you are allowed to do:

  1. If you are in a Combat Zone you may delay the action for up to 180 days after your last day in the combat zone
  2. If you were hospitalized, you can delay the action for up to the later of 180 days after your last day in the combat zone or 180 days from the last day of continuous qualified hospitalization for injury from service in the combat zone
  3. Additionally, the days above are extended by the number of days you had left to take action with the IRS when you deployed to the combat zone. For example in the case of filing your return.  If you deployed on 31 Mar you would receive a 180 day extension based on your last day in the Combat Zone plus the 15 days in April you had to file your tax return for a total extension of 195 days

The rules are very similar for spouses, but there are two changes:

  1. The extension does not apply to a spouse for any tax year beginning more than two years after the area ceases to be a Combat Zone (this would be the case for the spouse of someone declared missing in action)
  2. The extension does not apply to a spouse for any period the qualifying individual is hospitalized in the United States for injuries incurred in the Combat Zone

Further details can be found in IRS Pub 3, Armed Forces Tax Guide. As I remember, distractions aren’t the greatest thing when you are in a combat zone. Make sure you know your rights under the tax code so that you can focus on the mission at hand and come home alive.

 

Curt Sheldon, EA is a Fee-Only Financial Planner and Enrolled Agent based in Northern Virginia.  He can be contacted at (703)542-4000, (800)928-1820 or Curt@CLSheldon.com

IRS CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (or in any attachment) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed in this communication

The information contained in this blog is for general financial education and should not be construed as individual financial advice.  Please consult your own financial, tax or legal advisor prior to applying any principles discussed here to your own financial situation.