Is United States Military Pay Taxable When Living Abroad?
Serving your country by enlisting in the United States military is extremely honorable, but it doesn’t change your tax obligations. Whether you’re stationed in the United States or are living abroad as a member of the United States military, you’ll still have to pay taxes.
If you’re a United States military member living abroad, you will have to pay taxes on base pay. Soldiers serving in a hazardous or combat zone receiving combat pay won’t have to worry about paying taxes on that additional income. While the tax filing process can be similar to that of an average civilian, it can get complicated, especially if you have to defer the filing process because you’re overseas. Hiring a CPA can help soldiers focus on serving their country instead of facing tax season alone.
US Tax Help is dedicated to assisting those serving our country through reliable tax advice. To learn more about the CPAs at US Tax Help, United States military members living abroad can call us today at (541) 362-9127.
Do United States Military Members Have to Pay Taxes When Abroad?
As an active member of the United States military, you receive income for your services. Possibly surprisingly to some, part of that income can be taxed. Whether you live domestically or abroad, you may have to pay taxes as a United States military member.
Generally, the federal government only taxes military base pay, which is the standard amount members receive for their service. That means that you’ll still need to pay your taxes, even when stationed in a foreign country. When serving your country overseas, it benefits you to rely on a skilled CPA. You shouldn’t have to be concerned about using the proper forms or claiming the necessary deductions while serving overseas.
The good news is you probably won’t have to worry about paying taxes to your state of residence. Generally, states waive taxation for military members living abroad and stationed in the United States.
When United States military members living abroad have to pay taxes on their base pay, they use the standard tax filing form, IRS Form 1040. That being said, they may have to be aware of filing requirements specific to Americans living overseas if they have foreign financial assets, like IRS Form 8938 or FinCEN Form 114. This can get confusing quickly, so it’s beneficial for United States military members living abroad to seek help from a CPA.
What Forms of United States Military Pay Aren’t Taxable When Living Abroad?
While base pay is taxable by the federal government, additional forms of United States military pay aren’t when earned abroad. Understanding this is crucial so you don’t accidentally report forms of nontaxable income.
Generally, combat pay is never taxable, regardless of where you’re stationed. If you’re engaging in an active warzone on behalf of the United States military or in certain designated hazardous zones, you’ll receive combat pay. This is a monthly stipend for U.S. military members that’s free from federal taxation.
That being said, it may benefit United States military members living abroad to include combat pay on your tax returns as part of your taxable income. The purpose is to qualify for the Earned Income Tax Credit, which could help you lessen your tax burden and increase your tax refund. While that might sound counterintuitive at first, an accountant can explain the ins and outs of including nontaxable pay, like combat pay and certain allowances, as part of your taxable income.
What Are the Tax Deadlines for United States Military Members Living Abroad?
When serving abroad as a U.S. military member, you still need to pay your taxes on time. Because of this, it’s important to know your tax deadlines and any extensions you may be eligible for as a member of the armed forces.
If not stationed in a designated hazardous zone, military personnel living abroad must file their taxes by Tax Day. There are automatic extensions for certain scenarios, like when military members are outside of the United States and Puerto Rico on Tax Day.
There are also automatic extensions for United States military personnel in combat zones overseas. In such cases, members of the armed forces can delay filing their taxes for up to 180 days after leaving an active combat zone. This is the kind of tax information soldiers need to know, which is why it benefits them to enlist help from a CPA when living abroad. Like any other American taxpayer, U.S. military members living overseas can apply for extensions if they cannot file their taxes on time.
Are United States Military Members Living Abroad Eligible for Tax Deductions?
Apart from the fact that combat pay can be excluded from their taxes, there aren’t special tax deductions for United States military members living abroad. Deductions that generally apply to expats don’t apply to military personnel as the IRS still considers them U.S. residents.
For the most part, United States military members living abroad are eligible for the same tax deductions that members living domestically are. For example, they are eligible for certain moving deductions because military members relocate frequently. A tax professional can help United States military members uncover more advantageous deductions that can allow them to lower your taxable income of base pay.
Although you may be living abroad as a United States military member, you’re still considered a U.S. resident in the eyes of the IRS. Unfortunately, that means you can’t claim any expat-specific deductions on your annual tax returns.
United States Military Members Can Call Our Accountants for Tax Advice Today
If you’re a part of the armed forces, you deserve reliable tax advice so you can focus on serving your country. United States military members living abroad can learn more about the CPAs at US Tax Help by calling us today at (541) 362-9127.