How to Enter Nontaxable Combat Pay on an Income Tax Return

by Fraser Sherman, Demand Media Google
    Army, Navy and Air Force members can all serve in combat zones.

    Army, Navy and Air Force members can all serve in combat zones.

    If you're in the military, you earn nontaxable combat pay by serving in a combat zone. The zone must be designated by the President as a place where U.S. troops are in combat. The President can also end the combat-zone designation. Nontaxable combat pay doesn't show up on your W-2. You don't have to report it on your tax return at all.

    Qualifying

    You receive nontaxable combat pay for any month that you serve in a combat zone. Your pay is excluded from tax even if you only serve part of the month there. If you're hospitalized for combat-zone injuries, that counts, too. Along with base pay, the exclusion covers hostile-fire pay, reenlistment bonuses for that month, and pay for accrued leave. If your W-2 reports your combat pay, it's a mistake. Contact your finance office to get a corrected W-2.

    About the Author

    Fraser Sherman is a former reporter with the "Destin Log" newspaper and now freelances full-time. His work has been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life," and he's the author of three film reference books, including "Screen Enemies of the American Way." He specializes in finance and tech articles.

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