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IRS Publication 3 Armed Forces Tax Guide

IRS Publication 3 Armed Forces Tax Guide

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Published by James Campbell
This publication covers the special tax situations of active members of the U.S. Armed Forces. It does not cover mili-tary pensions or veterans' benefits or give the basic tax rules that apply to all taxpayers. For information on military pensions or veterans' benefits, see Publication 525, Taxable and Nontaxable Income.
This publication covers the special tax situations of active members of the U.S. Armed Forces. It does not cover mili-tary pensions or veterans' benefits or give the basic tax rules that apply to all taxpayers. For information on military pensions or veterans' benefits, see Publication 525, Taxable and Nontaxable Income.

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Published by: James Campbell on May 28, 2013
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Department of the Treasury
Internal Revenue Service
Cat. No. 46072M
Armed Forces'Tax Guide
For use in preparing
Get forms and other Informationfaster and easier by:InternetIRS.gov
What's New
2Gross Income
3Adjustments to Income
6Combat Zone Exclusion
8Alien Status
10Sale of Home
12Itemized Deductions
15Forgiveness of Decedent's Tax Liability
20Filing Returns
21Extension of Deadlines
23Deferral of Payment
25Maximum Rate of Interest
25How To Get Tax Help
What's New
Roth Thrift Savings Plan (TSP) balance.
You may beable to contribute to a designated Roth account throughthe TSP known as the Roth TSP. Roth TSP contributionsare after-tax contributions, subject to the same contribu-tion limits as the traditional TSP. Qualified distributionsfrom a Roth TSP are not included in your income. Formore details, see
Thrift Savings Accounts
in Part II in Pub-lication 721, Tax Guide to U.S. Civil Service RetirementBenefits.
Earned income credit.
The maximum income you canearn and still claim the earned income credit has in-creased. You may be able to take the earned incomecredit if you earned less than $45,060 ($50,270 for mar-ried filing jointly) if you have three or more qualifying chil-dren; $41,952 ($47,162 for married filing jointly) if youhave two qualifying children; $36,920 ($42,130 for mar-ried filing jointly) if you have one qualifying child; and$13,980 ($19,190 for married filing jointly) if you do nothave any qualifying children. See
Earned Income Credit 
,later, under
Standard mileage rate.
The standard mileage rate forthe cost of operating your car for business use in 2012 is55.5 cents a mile. The standard mileage rate for operatingyour car during 2012 to get medical care or to move is 23cents a mile. The standard mileage rate for charitable useof your vehicle is 14 cents a mile.
Jan 04, 2013
First-time homebuyer credit.
The first-time homebuyercredit has expired. Certain taxpayers who claimed thiscredit must repay it. See
First-Time Homebuyer Credit 
,later, under
Change of address.
If you change your mailing address,be sure to notify the Internal Revenue Service (IRS) usingForm 8822, Change of Address. Mail it to the Internal Rev-enue Service Center for your old address. (Addresses forthe Service Centers are on the back of the form.) UseForm 8822-B, Change of Address—Business, if you arechanging a business address.
Third party designee.
You can check the “Yes” box inthe
Third Party Designee
area of your return to authorizethe IRS to discuss your return with your preparer, a friend,a family member, or any other person you choose. This al-lows the IRS to call the person you identified as your des-ignee to answer any questions that may arise during theprocessing of your tax return. It also allows your designeeto perform certain actions. See your income tax instruc-tions for details.
Future developments.
For the latest information aboutdevelopments related to Publication 3, such as legislationenacted after it was published, go to
Photographs of missing children.
The Internal Reve-nue Service is a proud partner with the National Center forMissing and Exploited Children. Photographs of missingchildren selected by the Center may appear in this publi-cation on pages that would otherwise be blank. You canhelp bring these children home by looking at the photo-graphs and calling 1-800-THE-LOST (1-800-843-5678) ifyou recognize a child.
This publication covers the special tax situations of activemembers of the U.S. Armed Forces. It does not cover mili-tary pensions or veterans' benefits or give the basic taxrules that apply to all taxpayers. For information on militarypensions or veterans' benefits, see Publication 525, Taxa-ble and Nontaxable Income. If you need the basic taxrules or information on another subject not covered here,you can check our other free publications. See Publication910, IRS Guide to Free Tax Services, for a list and de-scriptions of the different tax publications.For federal tax purposes, the U.S. Armed Forces in-cludes commissioned officers, warrant officers, and enlis-ted personnel in all regular and reserve units under controlof the Secretaries of the Defense, Army, Navy, and AirForce. The U.S. Armed Forces also includes the CoastGuard. It does not include the U.S. Merchant Marine orthe American Red Cross.Members serving in an area designated or treated as acombat zoneare granted special tax benefits. In the eventan area ceases to be a combat zone, the IRS will do itsbest to notify you. Many of the relief provisions will end atthat time.
Comments and suggestions.
We welcome your com-ments about this publication and your suggestions for fu-ture editions.You can write to us at the following address:Internal Revenue ServiceIndividual and Specialty Forms and PublicationsBranchSE:W:CAR:MP:T:I1111 Constitution Ave. NW, IR-6526Washington, DC 20224We respond to many letters by telephone. Therefore, itwould be helpful if you would include your daytime phonenumber, including the area code, in your correspondence.You can email us at
. Please put“Publications Comment” on the subject line. You can alsosend us comments from
. Select“Comment on Tax Forms and Publications” under “MoreInformation.”Although we cannot respond individually to each com-ment received, we do appreciate your feedback and willconsider your comments as we revise our tax products.
Ordering forms and publications.
www.irs.gov/ formspubs/ 
to download forms and publications, call1-800-TAX-FORM (1-800-829-3676), or write to the ad-dress below and receive a response within 10 days afteryour request is received.Internal Revenue Service1201 N. Mitsubishi MotorwayBloomington, IL 61705-6613
Tax questions.
If you have a tax question, check theinformation available on IRS.gov or call 1-800-829-1040.We cannot answer tax questions sent to either of theabove addresses.
Useful Items
You may want to see:
Tax Guide for U.S. Citizens and Resident AliensAbroadTravel, Entertainment, Gift, and Car ExpensesExemptions, Standard Deduction, and FilingInformationChild and Dependent Care ExpensesTax Withholding and Estimated TaxU.S. Government Civilian Employees StationedAbroadU.S. Tax Guide for AliensMoving ExpensesSelling Your Home54463501503505516519521523Page 2
Publication 3 (2012)
Taxable and Nontaxable IncomeResidential Rental PropertyMiscellaneous DeductionsSurvivors, Executors, and AdministratorsIndividual Retirement Arrangements (IRAs)Earned Income Credit (EIC)Tax Benefits for EducationTax Relief for Victims of Terrorist Attacks
Form (and Instructions)
Amended U.S. Individual Income Tax ReturnStatement of Person Claiming Refund Due aDeceased TaxpayerPower of Attorney and Declaration ofRepresentativeMoving ExpensesApplication for Automatic Extension of Time ToFile U.S. Individual Income Tax ReturnChange of AddressChange of Address—BusinessInstallment Agreement RequestSee
How To Get Tax Help
near the end of this publication,for information about getting IRS publications and forms.52552752955959059697039201040X131028483903486888228822-B9465
Gross Income
Members of the Armed Forces receive many differenttypes of pay and allowances. Some are included in grossincome while others are excluded from gross income. In-cluded items (Table 1) are subject to tax and must be re-ported on your tax return. Excluded items (Table 2) arenot subject to tax, but may have to be shown on your taxreturn.For information on the exclusion of pay for service in acombat zone and other tax benefits for combat zone par-ticipants, see
Combat Zone Exclusion
Extension of Deadlines
, later.
Basic allowance for housing (BAH).
You can still de-duct mortgage interest and real estate taxes on yourhome if you pay these expenses with your BAH.
Death gratuity.
Any death gratuity paid to a survivor of amember of the Armed Forces is excluded from gross in-come.
Differential wage payments.
Differential wage pay-ments are any payments made by an employer to an indi-vidual for a period during which the individual is perform-ing service in the uniformed services while on active dutyfor a period of more than 30 days and that represent all ora portion of the wages the individual would have received
Table 1.
Included Items
These items are included in gross income, unless the pay is for service in a combat zone.
Basic pay
• Active duty
Bonus pay
• Career status• Attendance at a designated serviceschool• Enlistment• OfficerBack wages Overseas extensionCONUS COLA Reenlistment• Drills• Reserve training• Training duty
Other pay
• Accrued leave• High deployment per diem
Aviation career incentives Personal money allowances paid to
Career sea high-ranking officersDiving duty Student loan repayment from programsForeign duty (outside the 48 contiguous such as the Department of Defensestates and the District of Columbia) Educational Loan Repayment ProgramForeign language proficiency when year's service (requirement) is notHardship duty attributable to a combat zone• Hostile fire or imminent danger• Medical and dental officers
Incentive pay
• SubmarineNuclear-qualified officers FlightOptometry Hazardous dutyPharmacy High altitude/Low Opening (HALO)• Special compensation for assistancewith activities of daily living (SCAADL)• Special duty assignment pay• Veterinarian• Voluntary Separation Incentive
Publication 3 (2012)
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