Know What Is Not Taxable – Taxable Income
Service in a combat zone is tough, arduous duty. Being far from family, friends and comfortable, familiar surroundings is hard. Whether you serve in the Army, Navy Air Force, Marines, Coast Guard, active duty, reserve or National Guard you are entitled to a valuable tax break for your overseas deployment service to our country. Its called the Combat Zone Exclusion and its important for you to be informed about it.
Life Insurance Proceeds Life insurance proceeds that are paid to you as a result of the death of an insured individual are not taxable unless the policy is passed on to you at a particular cost. This happens even if the proceeds were paid under an accident, health insurance policy, or a donation. On the other hand, interest income obtained because of life insurance may be taxed. Make sure to find out which category the proceeds fall under.
Filing online will save time and money. Since taxes can be completed at any pace, filers will not have to take extra time attending an appointment with a CPA. There also will not be any fees to pay for services rendered by an accountant. Although these programs make it easy to file at their own pace, it is extremely important tax payers remember to file on time, or file for an extension on time.
Assistance is available for any questions filers may have. The online professional tax assistant can be contacted via email, phone, or chat. These tax experts can also help with complex tax situations such as audits, and filing extensions. Those who do not file their returns on time can expect to be penalized up to almost 50% of their unpaid taxes. Online tax services help ease the tax season burden.
Some other pay that is similarly non-taxable pay includes imminent danger and hostile fire pay, re-enlistment bonuses for agreements signed in theater and leave accrued in theater. Of course, your Basic Allowance for Subsistence (BAS) and Basic Allowance for Housing (BAH) are not taxable whether you are in a combat zone or not.
This date is usually April 15th. However, due to the Emancipation Day holiday the date has already been extended to April 18th. Extension filers must estimate and pay the amount they will owe when filing for the extension.
Tax payers should also be aware that if they do not send at least 90% of the estimated payment they will be charged a late payment penalty. Exceptions will be made for US citizens or resident aliens whose main place of work is abroad (outside of the United States and Puerto Rico).
Serving in a combat zone can be a rewarding experience. There are lots of opportunities for personal and professional growth. Friendships you forge there will last a life time. It can also be financially rewarding. To learn more, consult IRS Publication 3, Armed Forces' Tax Guide.
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