Reserve Component Personnel Issues: Questions and Answers
These Combat Veterans are eligible for health care services and community living care for conditions possibly related to their military service, and are not required to disclose their income information unless they would like to be considered for a higher priority status, beneficiary travel benefits, or exemption of co-pays for care unrelated to their military service. Activated Reservists and members of the National Guard are eligible if they served on active duty in a theater of combat operations after Nov.
Veterans who enroll with VA under this authority will continue to be enrolled even after their enhanced eligibility period ends. At the end of their enhanced eligibility period, Veterans enrolled in Priority Group 6 may be shifted to a lower priority group depending on their income level.
For additional information, call VETS Veterans must request a dental appointment within the first days post separation from active duty. VA pays monthly compensation benefits for disabilities incurred or aggravated during active duty, or active duty for training for disabilities as a result of injury or disease, or inactive duty training for disabilities due to injury, heart attack, or stroke.
Additionally, the discharge must be under other than dishonorable conditions. Benefits are payable for training pursued on or after Aug. No payments can be made under this program for training pursued before that date. To be eligible, the Servicemember or Veteran must serve at least 90 aggregate days on active duty after Sept. Active duty includes active service performed by National Guard members under title 32 U. Eligibility for benefits expires 15 years from the last period of active duty of at least 90 consecutive days.
If released for a service- connected disability after at least 30 days of continuous service, eligibility ends 15 years from when the member is released for the service-connected disability. To be eligible, the participant must:. Reserve components determine eligibility for benefits. VA does not make decisions about eligibility and cannot make payments until the Reserve component has determined eligibility and notified VA. Benefits generally end the day a reservist or National Guard member separates from the military.
Additionally, if in the Selected Reserve and called to active duty, VA can generally extend the eligibility period by the length of time on active duty plus four months for each period of active duty. Once this extension is granted, it will not be taken away after leaving the Selected Reserve. Eligible members separated because of unit deactivation, a disability that was not caused by misconduct, or otherwise involuntarily separated during Oct.
Similarly, members involuntarily separated from the Selected Reserve due to a deactivation of their unit between Oct. The rate for full-time training effective Oct. Part-time benefits are reduced proportionately. For complete current rates, visit www. DoD may make additional contributions. Participants may pursue training at a college or university, or take technical training at any approved facility. Training includes undergraduate, graduate, or post-graduate courses; state licensure and certification; courses for a certificate or diploma from business, technical or vocational schools; cooperative training; apprenticeship or on-the-job training; correspondence courses; independent study programs; flight training; entrepreneurship training; remedial, deficiency or refresher courses needed to complete a program of study; or preparatory courses for tests required or used for admission to an institution of higher learning or graduate school.
Accelerated payments for certain high-cost programs are authorized effective Jan. This program provides educational assistance to members of National Guard and Reserve components who are called or ordered to active duty service in response to a war or national emergency as declared by the President or Congress. Visit www. Generally, a Servicemember who serves on active duty on or after Sept.
Reserve or National Guard members whose eligibility is based upon continuous service receive a payment rate based upon their number of continuous days on active duty. Members who qualify after the accumulation of three or more years of aggregate active duty service receive the full payment allowable. Training includes undergraduate, graduate, or post-graduate courses; state licensure and certification courses; courses for a certificate or diploma from business, technical or vocational schools; cooperative training; apprenticeship or on-the-job training; correspondence courses; independent study programs; flight training; entrepreneurship training; remedial, deficiency, or refresher courses needed to complete a program of study; or preparatory courses for tests required or used for admission to an institution of higher learning or graduate school.
Accelerated payments for certain high-cost programs are authorized. Prior to Jan. You were ordered or called to active duty after September 11, You were ordered or called to active duty for a period of more than days or for an indefinite period because you are a member of a reserve component see Am I a Member of a Reserve Component , earlier, under Travel Expenses of Armed Forces Reservists. The distribution is from an IRA or from amounts attributable to elective deferrals under a section k or b plan or a similar arrangement.
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The distribution was made no earlier than the date of the order or call to active duty and no later than the close of the active duty period. Can I repay amounts distributed from my IRA, section k or b plan, or a similar arrangement? You may be able to contribute repay , to an IRA, amounts equal to any qualified reservist distributions defined earlier you received. You can make these repayment contributions even if they would cause your total contributions to the IRA to be more than the general limit on contributions.
You make these repayment contributions to an IRA, even if you received the qualified reservist distribution from a section k or b plan or a similar arrangement. You can make these repayment contributions up to and including the date that is 2 years after your active duty period ends. If you repay a qualified reservist distribution, include the amount of the repayment with nondeductible contributions on line 1 of Form , Nondeductible IRAs. A qualified disaster distribution is any distribution you received in or from an eligible retirement plan if all of the following conditions are met.
Your main home at any time during the calendar year was located in a disaster area s listed in Table 1 in the Instructions for Form A. You sustained an economic loss because of the disaster s in 2 above. If 1 through 3 apply, you can generally designate any distribution in or including periodic payments and required minimum distributions from an eligible retirement plan as a qualified disaster distribution, regardless of whether the distribution was made on account of a disaster. Qualified disaster distributions were permitted without regard to your need or the actual amount of your economic loss.
A reduction or offset in or of your account balance in an eligible retirement plan in order to repay a loan also could have been designated as a qualified disaster distribution. See the Instructions for Form or A for more information. You may be able to exclude from income the value of government-provided services and reimbursement. If you weren't reimbursed, you may be able to deduct expenses you incurred when you moved. We discuss both below. To deduct moving expenses, you must be a member of the Armed Forces, on active duty and, due to a military order, your move is a result of a permanent change of station.
A move from your last post of duty to your home or to a nearer point in the United States. The move must occur within 1 year of ending your active duty or within the period allowed under the Joint Travel Regulations. Are there additional considerations when a spouse or dependent moves? If you are the spouse or dependent of a member of the Armed Forces who deserts, is imprisoned, or dies, a permanent change of station for you includes a move to:.
If the military moves you to or from a different location than the member, the moves are treated as a single move to your new main job location. Don't include in your income the value of moving and storage services provided by the government because of a permanent change of station. Similarly, don't include in income amounts received as a dislocation allowance, temporary lodging expense, temporary lodging allowance, or move-in housing allowance. Generally, if the total reimbursements or allowances that you receive from the government because of the move are more than your actual moving expenses, the excess is included in your wages on Form W However, if any reimbursements or allowances other than dislocation allowances, temporary lodging expenses, temporary lodging allowances, or move-in housing allowances exceed the cost of moving and the excess isn't included in your wages on Form W-2, the excess still must be included in gross income on Form , line 1.
If you must relocate and your spouse and dependents move to or from a different location, don't include in income reimbursements, allowances, or the value of moving and storage services provided by the government to move you and your spouse and dependents to and from the separate locations. If you move because of a permanent change of station , you can deduct the reasonable unreimbursed expenses of moving you and members of your household.
A member of your household is anyone who has both your former home and your new home as his or her main home. It doesn't include a tenant or employee unless you can claim that person as a dependent on your tax return. You can deduct expenses if not reimbursed or furnished in kind for:. You can deduct the expenses of moving your household goods and personal effects, including expenses for hauling a trailer, packing, crating, in-transit storage, and insurance.
You can't deduct expenses for moving furniture or other goods you bought on the way from your old home to your new home. Storing and insuring household goods and personal effects. You can include only the cost of storing and insuring your household goods and personal effects within any period of 30 consecutive days after the day these goods and effects are moved from your former home and before they are delivered to your new home.
You can deduct the expenses of traveling including lodging within certain limitations, but not meals from your old home to your new home, including car expenses and air fare. You can deduct as car expenses either:. You can add parking fees and tolls to the amount claimed under either method. You can't deduct any expenses for meals. You can't deduct the cost of unnecessary side trips or lavish and extravagant lodging.
A foreign move is a move from the United States or its possessions to a foreign country or from one foreign country to another foreign country. A move from a foreign country to the United States or its possessions isn't a foreign move. For a foreign move, the deductible moving expenses described earlier are expanded to include the reasonable expenses of:. Storing these items for part or all of the time the new job location remains your main job location. The new job location must be outside the United States. Figure moving expense deductions on Form The Form instructions provide information on how to figure your deduction for qualified expenses that exceed your reimbursements and allowances including dislocation allowances, temporary lodging expenses, temporary lodging allowances, or move-in housing allowances that are excluded from gross income.
If you qualify to deduct expenses for more than one move, use a separate Form for each move. Carry the moving expense deduction from Form s , line 5, to Schedule 1 Form , line For more information, see Pub. Gross income does not include compensation you received for active service in the Armed Forces for any month during any part of which you served in a combat zone or qualified hazardous duty area. The exclusion available to you as a member of the Armed Forces may depend on your rank. Enlisted members, warrant officers, and commissioned warrant officers.
If you are an enlisted member, warrant officer, or commissioned warrant officer, you can exclude the following amounts from your income. Active duty pay earned in any month you served in a combat zone. See Combat Pay Exclusion below. See Serving in a Combat Zone , later. A reenlistment bonus if the voluntary extension or reenlistment occurs in a month you served in a combat zone.
Pay for accrued leave earned in any month you served in a combat zone. The DoD must determine that the unused leave was earned during that period. Pay received for duties as a member of the Armed Forces in clubs, messes, post and station theaters, and other nonappropriated fund activities. The pay must be earned in a month you served in a combat zone. Awards for suggestions, inventions, or scientific achievements you are entitled to because of a submission you made in a month you served in a combat zone. Student loan repayments. If the entire year of service required to earn the repayment was performed in a combat zone, the entire repayment made because of that year of service is excluded.
If only part of that year of service was performed in a combat zone, only part of the repayment qualifies for exclusion. Commissioned officers other than commissioned warrant officers. If you are a commissioned officer other than a commissioned warrant officer , you may exclude part of your combat pay. There is a limit to the amount of combat pay you can exclude. Enlisted member, warrant officer, or commissioned warrant officer. If you are an enlisted member, warrant officer, or commissioned warrant officer, none of your combat pay is included in your income for tax purposes.
If you are a commissioned officer other than a commissioned warrant officer , there is a limit to the amount of combat pay you can exclude. Though your combat pay is excluded from income, you can elect to include it in income in figuring your earned income credit. See Can I treat my nontaxable combat pay as earned income? Ordinarily, you don't have to do anything for this exclusion to apply. The exclusion will be reflected on your Form W The wages shown in box 1 of your Form W-2 shouldn't include military pay excluded from your income under the combat pay exclusion provisions.
If it does, you will need to get a corrected Form W-2 from your finance office. You can't exclude as combat pay any wages shown in box 1 of Form W See also Disability Severance Payments to Veterans , later, for special rules relating to severance pay. A combat zone as designated by the President in an Executive order see Combat Zone Defined , later ;. A qualified hazardous duty area designated by Congress while receiving hostile fire pay or imminent danger pay in accordance with 37 U. An area outside the combat zone or qualified hazardous duty area when the DoD certifies that such service is in direct support of military operations in a combat zone or qualified hazardous duty area, and the member receives hostile fire pay or imminent danger pay see Serving outside combat zone considered serving in a combat zone , later.
Served in a combat zone ; or. Were hospitalized as a result of wounds, disease, or injury incurred while serving in the combat zone. You don't have to receive the excluded pay while you are in a combat zone, are hospitalized, or in the same year you served in a combat zone. Partial month service is treated as full month of service. If you serve in a combat zone for any part of 1 or more days during a particular month, you are entitled to a combat pay exclusion for that entire month. Retirement pay and pensions don't qualify for the combat pay exclusion.
A combat zone is any area the President of the United States designates by Executive order as an area in which the U. Armed Forces are engaging or have engaged in combat. An area usually becomes a combat zone and ceases to be a combat zone on the dates the President designates by Executive order. To date, the Afghanistan area , the Kosovo area , and the Arabian Peninsula have been designated as combat zones.
Combat zone tax benefits have been designated by Congress for the Sinai Peninsula of Egypt under certain circumstances. Each of the combat zones and the Sinai Peninsula are discussed below. Serving outside combat zone considered serving in a combat zone. Military service outside a combat zone is considered to be performed in a combat zone if:.
The DoD designates that the service is in direct support of military operations in the combat zone, and. The service qualifies you for special military pay for duty subject to hostile fire or imminent danger under 37 U. Military pay received for this service will qualify for the combat pay exclusion if all of the requirements discussed in Service Eligible for Combat Pay Exclusion , later, other than service in a combat zone, are met and if the pay is verifiable by reference to military pay records.
By Executive Order No.
The following countries were certified by the DoD for combat zone tax benefits due to their direct support of military operations in the Afghanistan combat zone. For the Philippines only, the personnel must have deployed in conjunction with Operation Enduring Freedom or Operation Freedom Sentinel supporting military operations in the Afghanistan combat zone.
The combat zone designation for Montenegro and Kosovo previously a province within Serbia under Executive Order remains in force even though Montenegro and Kosovo have become independent nations since EO was signed. The part of the Arabian Sea that is north of 10 degrees north latitude and west of 68 degrees east longitude. The following countries were certified by the DoD for combat zone tax benefits due to their direct support of military operations in the Arabian Peninsula combat zone.
Turkey east of Section of Public Law designates the Sinai Peninsula of Egypt as a qualified hazardous duty area that is treated as if it were a combat zone. This designation generally applies for the period beginning June 10, For more information about amending prior year returns to take advantage of the benefits associated with this designation, see the Instructions for Form X. As noted earlier, pay eligible for the combat pay exclusion must have been received for a month in which you either served in a combat zone or were hospitalized as a result of wounds, disease, or injury incurred while serving in the combat zone.
We discuss these below. Also see Serving outside combat zone considered serving in a combat zone , earlier, under Combat Zone Defined. Service in a combat zone includes any periods you are absent from duty because of sickness, wounds, or leave. If, as a result of serving in a combat zone, a person becomes a prisoner of war or is missing in action, that person is considered to be serving in the combat zone so long as he or she keeps that status for military pay purposes.
If you are hospitalized while serving in a combat zone, the wound, disease, or injury causing the hospitalization will be presumed to have been incurred while serving in the combat zone unless there is clear evidence to the contrary. You are hospitalized for a specific disease in a combat zone where you have been serving for 3 weeks, and the disease for which you are hospitalized has an incubation period of 2 to 4 weeks.
The disease is presumed to have been incurred while you were serving in the combat zone. On the other hand, if the incubation period of the disease is 1 year, the disease wouldn't have been incurred while you were serving in the combat zone. In some cases, the wound, disease, or injury may have been incurred while you were serving in the combat zone, even though you weren't hospitalized until after you left.
In that case, you can exclude military pay earned while you are hospitalized as a result of the wound, disease, or injury. You were hospitalized for a specific disease 3 weeks after you departed the combat zone. The incubation period of the disease is from 2 to 4 weeks. The disease is presumed to have been incurred while serving in the combat zone. Time limit on combat pay exclusion for pay received while hospitalized.
If you are hospitalized, you can't exclude any military pay received for any month of service that begins more than 2 years after the end of combat activities in the combat zone. This pay won't be combat pay. Passage over or through a combat zone during a trip between two points that are outside a combat zone.
You may not have to pay tax on all or part of the gain from the sale of your main home. Usually, your main home is the one you live in most of the time. It can be a:. The exclusion is allowed each time you sell or exchange a main home, but generally not more than once every 2 years. You will be eligible for the exclusion if, during the 5-year period ending on the date of the sale, you:. Lived in the home as your main home for at least 2 years the use test.
If you don't meet the ownership and use tests due to a move to a new permanent duty station, you can exclude gain, but the maximum amount of gain you can exclude will be reduced. See Pub. You can choose to have the 5-year test period for ownership and use suspended during any period you or your spouse serve on qualified official extended duty as a member of the Armed Forces.
This means that you may be able to meet the 2-year use test even if, because of your service, you didn't actually live in your home for the required 2 years during the 5-year period ending on the date of sale. David bought and moved into a home in For the next 6 years, he didn't live in it because he was on qualified official extended duty with the Army. He then sold the home at a gain in To meet the use test, David chooses to suspend the 5-year test period for the 6 years he was on qualifying official extended duty.
This means he can disregard those 6 years. Therefore, David's 5-year test period consists of the 5 years before he went on qualifying official extended duty. The period of suspension can't last more than 10 years. You can't suspend the 5-year period for more than one property at a time.
You can revoke your choice to suspend the 5-year period at any time. You are on qualified official extended duty if you serve on extended duty either:. You are on extended duty when you are called or ordered to active duty for a period of more than 90 days or for an indefinite period.
You may be able to exclude your gain from the sale of a home that you have used as a rental property or for business. However, you must meet the ownership and use tests discussed in Pub. If the sale of your main home results in a gain that is allocated to one or more period s of nonqualified use, you can't exclude that gain from your income. Nonqualified use means any period after when neither you nor your spouse or your former spouse used the property as a main home, with certain exceptions. For example, a period of nonqualified use doesn't include any period not to exceed a total of 10 years during which you or your spouse is serving on qualified official extended duty , discussed above.
You will be able to exclude the gain attributable to the period during which you or your spouse served on qualified official extended duty. All servicemembers who received a settlement payment reported on a Form may need to report the amount on their tax return as income. However, the tax treatment of settlement payments will depend on the facts and circumstances as illustrated below. Generally, you must include the lump-sum payment in gross income.
In limited circumstances, you may be able to exclude part or all of the lump-sum payment from gross income. For example, you may qualify to exclude part or all of the payment from gross income if you can show that the payment was made to reimburse specific nondeductible expenses such as living expenses you incurred because of the SCRA violation. Interest payment on lump-sum portion of settlement payment.
You must include any interest on the lump-sum portion of your settlement payment in your income. If you lost your main home in foreclosure, you should treat the lost equity payment as an additional amount you received on the foreclosure of the home. You will have a gain on the foreclosure only if the sum of the lost equity payment and the value of the main home at foreclosure is more than what you paid for the home. In many cases, this gain may be excluded from income.
For more information on the rules for excluding all or part of any gain from the sale including a foreclosure of a main home, see Pub. The rules that apply to a lost equity payment you received for the foreclosure of a property that wasn't your main home are different.
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To find rules for reporting gain or loss on the foreclosure of property that wasn't your main home, see Pub. Interest payment on lost equity portion of settlement payment. You must include any interest on the lost equity portion of your settlement payment in your income. You can no longer claim any miscellaneous itemized deductions, including the deduction for unreimbursed employee business expenses. If you are an Armed Forces reservist, you may be able to deduct unreimbursed employee business expenses as an adjustment to income.
Reserve Component Personnel Issues: Questions and Answers
These deductions are not available for active duty service members. If you had to repay to your employer an amount that you included in your income in an earlier year, you may be able to deduct the repaid amount from your income for the year in which you repaid it. Where you report the repayment on your tax return will depend on the amount of the repayment.
See Repayments in Pub. After you have figured your taxable income and tax liability, you can determine if you are entitled to any tax credits. This section discusses the child tax credit and credit for other dependents , additional child tax credit , earned income credit , and credit for excess social security tax withheld. For information on other credits, see your tax form instructions.
The additional child tax credit is a credit you may be able to take if you aren't able to claim the full amount of the child tax credit. The additional child tax credit is discussed later. The child tax credit isn't the same as the credit for child and dependent care expenses. If you don't have an SSN or ITIN by the due date of your return including extensions , you can't claim the child tax credit on either your original or an amended return, even if you later get an SSN.
Your child is a qualifying child for purposes of the child tax credit if your child meets all seven of the following conditions. Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them for example, your grandchild, niece, or nephew. Lived with you for more than half of but see Are there exceptions to the time lived with you requirement , later.
Reserve Component Personnel Issues: Questions and Answers - PDF
Was a U. If the child was adopted, see Adopted child , later. Temporary absences by you or the other person for special circumstances, such as school, vacation, business, medical care, military service, or detention in a juvenile facility, count as time the person lived with you. If the person meets all other requirements to be your qualifying child but was born or died in , the person is considered to have lived with you for more than half of if your home was this person's home for more than half the time he or she was alive in Any other person is considered to have lived with you for all of if the person was born or died in and your home was this person's home for the entire time he or she was alive in There also are exceptions for kidnapped children and children of divorced or separated parents.
For details, see Pub. What if my child is the qualifying child of more than one person? A special rule applies if your qualifying child is the qualifying child of more than one person. Your adopted child is always treated as your own child. An adopted child includes a child lawfully placed with you for legal adoption. If you are a U. You must reduce your child tax credit if either 1 or 2 below applies. The amount on Form , line 11, is less than the credit. If the amount is zero, you can't take this credit because there is no tax to reduce. However, you may be able to take the additional child tax credit.
See Additional Child Tax Credit , later. Your modified adjusted gross income AGI , figured as described later, is more than the amount shown below for your filing status. For purposes of the child tax credit, your modified AGI is the amount on Form , line 7, plus the following amounts that may apply to you. Any amount excluded from income because of the exclusion of income from Puerto Rico.
To claim the child tax credit, you must file Form For each qualifying child, you must check the "child tax credit" box in column 4 of the Dependents section on page 1 of Form For more information on the child tax credit, see the Instructions for Form , especially the Child Tax Credit and Credit for Other Dependents Worksheet in those instructions. You and each qualifying child must have the required taxpayer identification number. If you didn't have an SSN or ITIN by the due date of your return including extensions , you can't claim the child tax credit on either your original or an amended return.
Also, no credit is allowed on either your original or an amended return with respect to a child who didn't have an SSN valid for employment by the due date of your return including extensions , even if that child later gets one. The child tax credit and credit for other dependents are both figured using the Child Tax Credit and Credit for Other Dependents Worksheet in the Instructions for Form Both the child tax credit and credit for other dependents are claimed on Form , line 12a, or Form NR, line Form , who must file. You must file Form to claim the child tax credit or credit for other dependents if your child tax credit or additional child tax credit for a year after was denied or reduced for any reason other than a math or clerical error.
Attach a completed Form to your return. Don't file Form if you filed Form for and the child tax credit or additional child tax credit was allowed for that year. See Form and its instructions for details. If you take the child tax credit or credit for other dependents even though you aren't eligible and it is determined that your error is due to reckless or intentional disregard of the rules for these credits, you won't be allowed to take either credit or the additional child tax credit for 2 years even if you are otherwise eligible to do so.
If you fraudulently take the child tax credit, you won't be allowed to take either credit for 10 years. You also may have to pay penalties. This credit is for certain people who have at least one qualifying child for the child tax credit. The additional child tax credit may give you a refund even if you don't owe any tax or didn't have any tax withheld. However, these children may still qualify for the new nonrefundable credit for other dependents. For more information, see the Instructions for Form and Form This delay applies to the entire refund, not just the portion associated with the additional child tax credit.
The earned income credit EIC is a credit for certain persons who work. The credit may give you a refund even if you don't owe any tax or didn't have any tax withheld. You must satisfy certain criteria in order to claim the EIC. The criteria you must meet depends on whether you have a qualifying child.
If you take the EIC even though you aren't eligible and it is determined that your error is due to reckless or intentional disregard of the EIC rules, you won't be allowed to take the credit for 2 years even if you are otherwise eligible to do so. If you fraudulently take the EIC, you won't be allowed to take the credit for 10 years. Refunds for returns claiming the earned income EIC can't be issued before mid-February This delay applies to the entire refund, not just the portion associated with the EIC.
If you don't have a social security number an SSN by the due date of your return including extensions , you can't claim the EIC on either your original or an amended return, even if you later get an SSN. If you have a qualifying child defined later , you must satisfy all nine of the following rules to claim the earned income credit. You must have earned income defined later.
You generally can't be a qualifying child of another person. If filing a joint return, your spouse also can't be a qualifying child of another person. Your qualifying child can't be used by more than one person to claim the credit. If your qualifying child is the qualifying child of more than one person, you must be the person who can treat the child as a qualifying child. If the other person can claim the child as a qualifying child, you may be able to claim the EIC under the rules for a taxpayer without a qualifying child.
For details, see Rule 9 in Pub. You can't file Form or Form EZ to exclude income earned in foreign countries, or to deduct or exclude a foreign housing amount. You choose to be treated as a resident alien for the entire year. If you need more information about making this choice, see Resident Aliens , later. For most people, investment income is taxable interest and dividends, tax-exempt interest, and capital gain net income. You must have a valid social security number for yourself, your spouse if filing a joint return , and any qualifying child. Your child is a qualifying child if your child passes four tests and has a social security number as required in Social security number of child , later.
The four tests are:. Relationship ,. Age ,. Residency , and. Joint return. Each test, and the social security number requirement, are discussed below. In order to be classified as a qualifying child, your child must pass the relationship test. Your child passes this test if the child is your:. Son, daughter, stepchild, foster child, or a descendant of any of them for example, your grandchild ; or.
Brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them for example, your niece or nephew. An adopted child is always treated as your own child. The term "adopted child" includes a child who was lawfully placed with you for legal adoption. Your foster child, for the relationship test, is a child placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction.
An authorized placement agency includes a state or local government agency. It also includes a tax-exempt organization licensed by a state. In addition, it includes an Indian tribal government or an organization authorized by an Indian tribal government to place Indian children. In order to be classified as a qualifying child, your child must pass the age test.
A child passes the age test if he or she is in at least one of the following categories. Category 1. Under age 19 at the end of and younger than you or your spouse, if filing jointly. Category 2. Under age 24 at the end of , a full-time student , and younger than you or your spouse, if filing jointly. Category 3. Permanently and totally disabled at any time during , regardless of age. A full-time student is a student who is enrolled for the number of hours or courses the school considers to be full-time attendance.
To qualify as a student, your child must be, during some part of each of any 5 calendar months during the calendar year:. A full-time student at a school that has a regular teaching staff, course of study, and regular student body at the school; or. A student taking a full-time, on-farm training course given by a school described in 1 , or a state, county, or local government. A school can be an elementary school, junior or senior high school, college, university, or technical, trade, or mechanical school. However, on-the-job training courses, correspondence schools, and schools offering courses only through the Internet don't count as schools for the EIC.
Students who work in co-op jobs in private industry as a part of a school's regular course of classroom and practical training are considered full-time students.
Your child is permanently and totally disabled if both of the following apply. He or she can't engage in any substantial gainful activity because of a physical or mental condition. A doctor determines the condition has lasted or can be expected to last continuously for at least a year or can lead to death.
In order to be classified as a qualifying child, your child must pass the residency test. A child passes the residency test if he or she has lived with you in the United States for more than half of The United States includes the 50 states and the District of Columbia. It doesn't include Puerto Rico or U. Extended active duty means you are called or ordered to duty for an indefinite period or for a period of more than 90 days. Once you begin serving your extended active duty, you are still considered to have been on extended active duty even if you don't serve more than 90 days.
A child who was born or died in is treated as having lived with you for more than half of if your home was the child's home for more than half of the time he or she was alive in Count time that you or your child is away from home on a temporary absence due to a special circumstance as time the child lived with you. A kidnapped child is treated as living with you for more than half of the year if the child lived with you for more than half the part of the year before the date of the kidnapping.
The child must be presumed by law enforcement authorities to have been kidnapped by someone who isn't a member of your family or your child's family. This treatment applies for all years until the child is returned. However, the last year this treatment can apply is the earlier of:. If your qualifying child has been kidnapped and meets these requirements, enter "KC," instead of a number, on line 6 of Schedule EIC.
In order to be classified as a qualifying child, your child must satisfy the joint return test. There are two parts to this test. First, the child can't file a joint return for the year unless the joint return is filed only as a claim for refund. Second, even if your child doesn't file a joint return, if your child was married at the end of the year, he or she can't be your qualifying child unless:.
The reason you can't claim the child as a dependent is that you let the child's other parent claim the child as a dependent under the special rule for divorced or separated parents or parents who live apart described in Pub. In order to be classified as a qualifying child, your child must have a valid social security number SSN unless the child was born and died in If a child didn't have an SSN on or before the due date of your return including extensions , you can't count that child as a qualifying child in figuring the EIC on either your original or an amended return, even if that child later gets an SSN.
You can't claim the EIC on the basis of a qualifying child if:. Your qualifying child's SSN is missing from your tax return or is incorrect;. Your qualifying child's social security card says "Not valid for employment" and was issued for use in getting a federally funded benefit; or. An adoption taxpayer identification number ATIN , which is issued to adopting parents who can't get an SSN for the child being adopted until the adoption is final. If you have more than one qualifying child and only one has a valid SSN, you can claim the EIC only on the basis of that one child.
If you don't have a qualifying child, you can take the credit if you satisfy all 11 of the following rules. You can't be a qualifying child of another person. You must be at least age 25 but under age 65 at the end of the year. If filing a joint return, either you or your spouse must be at least age 25 but under age 65 at the end of the year.
You can't be claimed as a dependent by anyone else on that person's return. If filing a joint return, your spouse also can't be claimed as a dependent by anyone else on that person's return. Your main home must be in the United States for more than half the year. If you satisfy all 11 of these rules, fill out the EIC worksheet in your tax form instructions to figure the amount of your credit.
When figuring your earned income for the EIC, you must know what counts as earned income as well as what doesn't count as earned income. Both categories of income are described below. For purposes of the earned income credit, earned income includes the following. Nontaxable combat pay if you elect to include it in earned income. Can I treat my nontaxable combat pay as earned income?
You can elect to include your nontaxable combat pay in earned income for the earned income credit. If you make the election, you must include in earned income all nontaxable combat pay you received. If you are filing a joint return and both you and your spouse received nontaxable combat pay, you can each make your own election.
The amount of your nontaxable combat pay should be shown on your Form W-2 in box 12 with code Q. Electing to include nontaxable combat pay in earned income may increase or decrease your EIC. Figure the credit with and without your nontaxable combat pay before making the election. Whether the election increases or decreases your EIC depends on your total earned income, filing status, and number of qualifying children.
If your earned income without your combat pay is less than the amount shown below for your number of children, you may benefit from electing to include your nontaxable combat pay in earned income and you should figure the credit both ways. If your earned income without your combat pay is equal to or more than these amounts, you won't benefit from including your combat pay in your earned income.
The following examples illustrate the effect of including nontaxable combat pay in earned income for the EIC. Example 1—Election increases the EIC. George and Janice are married and will file a joint return. They have one qualifying child. Because making the election will increase their EIC, they elect to add the nontaxable combat pay to their earned income for the EIC. They also enter the amount of their nontaxable pay and write "NCP" in the space to the left of line 17 on Form Example 2—Election doesn't increase the EIC.
When figuring your earned income for purposes of the earned income credit, don't include any of these amounts. Basic pay or special, bonus, or other incentive pay that is subject to the combat pay exclusion unless you make the election described earlier in Can I treat my nontaxable combat pay as earned income. There are certain instructions you must follow before the IRS can figure the credit for you. Most employers must withhold social security tax from your wages. You are eligible for the credit for excess social security tax withheld only if you had more than one employer.
The employer should adjust the tax for you. If the employer doesn't adjust the overcollection, you can file a claim for refund using Form , Claim for Refund and Request for Abatement. If you are filing a joint return, you can't add the social security tax withheld from your spouse's wages to the amount withheld from your wages in determining whether you or your spouse had excess social security tax withheld. You must figure the withholding separately for you and your spouse to determine if either of you has excess withholding.
You can use the Credit for Excess Social Security Tax Withheld Worksheet to figure your credit for excess social security tax withheld on wages in only if you had no wages in from employers that were railroads. If you worked for a railroad employer in , see Do I figure my credit differently if I am a railroad employee?
Do I figure my credit differently if I am a railroad employee? If you work for a railroad employer, the discussion in this section doesn't apply to you. If you bought your home in , you generally must repay the first-time homebuyer credit over a year period in 15 equal installments. For your and later tax returns, the repayment requirement will only apply to a home you bought in While in active service in a combat zone see Combat Zone Related Forgiveness , later ;.
From wounds, disease, or other injury received in a combat zone see Combat Zone Related Forgiveness , later ; or. From wounds or injury incurred in a terrorist or military action see Terrorist or Military Action Related Forgiveness , later. If the tax being forgiven hasn't yet been paid, it may not have to be paid. If the tax being forgiven has been paid, the payment may be refunded.
Dies while in active service in a combat zone, or at any place from wounds, disease, or injury incurred while in active service in a combat zone. Except as limited in Deadline for Filing a Claim for Tax Forgiveness , later, forgiveness applies to:. Any earlier tax year ending on or after the first day the member served in a combat zone in active service. In addition, any unpaid taxes for years ending before the member began service in a combat zone will be forgiven and any of those taxes that are paid after the date of death will be refunded.
The beneficiary or trustee of the estate of a deceased servicemember doesn't have to pay tax on any amount received that would have been included had the servicemember not died in the deceased member's gross income for the year of death. These rules also apply to a member of the Armed Forces serving outside the combat zone if the service:. Qualified the member for special military pay for duty subject to hostile fire or imminent danger.
The date of death for a member of the Armed Forces who was in a missing status missing in action or prisoner of war is the date his or her name is removed from missing status for military pay purposes. This is true even if death actually occurred earlier. Terrorist or military action related forgiveness occurs when an individual meets both of the following criteria. Dies from wounds or injury incurred while a member of the U.
Armed Forces in a terrorist or military action. Any earlier tax year in the period beginning with the year before the year in which the wounds or injury occurred.
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A terrorist or military action is any terrorist activity primarily directed against the United States or its allies or any military action involving the U. Armed Forces and resulting from violence or aggression against the United States or its allies or threat thereof. Any multinational force in which the United States participates is considered an ally of the United States.
Army Private John Kane died in of wounds incurred in a terrorist attack in His income tax liability is forgiven for all tax years from through If the decedent's tax liability is forgiven, the personal representative should take the following steps. The form filed to claim the tax forgiveness depends on whether a return has already been filed for the tax year.
File a paper Form if a tax return hasn't been filed for the tax year. Form W-2 must accompany the return. File a paper Form X if a tax return has been filed. A separate paper Form X must be filed for each year in question. Properly identify the return by providing the conflict or action on which the claim for tax forgiveness is based. If the individual was killed in a terrorist action, write "KITA" on the front of the return and on the line for total tax. Include an attachment with a computation of the decedent's tax liability before any amount is forgiven and the amount that is to be forgiven.
For computations when the decedent has filed joint returns or the spouse has filed as married filing separately, see below. Only the decedent's part of the joint income tax liability is eligible for the refund or tax forgiveness. To determine the decedent's part, the person filing the claim must:. Figure the income tax for which the decedent would have been liable if a separate return had been filed,. Figure the income tax for which the spouse would have been liable if a separate return had been filed, and.
Multiply the joint tax liability by a fraction. The top number of the fraction is the amount in 1 above. The bottom number of the fraction is the total of 1 and 2. The amount in 3 is the decedent's tax liability that is eligible for the refund or tax forgiveness. If you are unable to complete this process, you should attach a statement of all income and deductions, indicating the part that belongs to each spouse. The IRS will determine the amount eligible for forgiveness. If the decedent's legal residence was in a community property state and the spouse reported half the military pay on a separate return, the spouse can get a refund of taxes paid on his or her share of the pay for the years involved.
The forgiveness of unpaid tax on the military pay also would apply to the half owed by the spouse for the years involved. See Community Property , earlier, for a discussion of community property. Form , Statement of Person Claiming Refund Due a Deceased Taxpayer, must accompany the return unless the person filing the return is:.
A personal representative filing an original Form for the decedent and a court certificate showing the appointment as personal representative is attached to the return. For civilian employees of all other agencies who are killed overseas, certification must be a letter signed by the Director General of the Foreign Service, Department of State, or his or her delegate.
The certification must include the deceased individual's name and social security number, the date of injury, the date of death, and a statement that the individual died as the result of a terrorist or military action. If the individual died as a result of a terrorist or military action outside the United States, the statement also must include the fact that the individual was a U.
Can I get more time to file if I don't have enough tax information by the deadline? If the death certification required in Step 5 has been received but there isn't enough tax information to file a timely claim for refund, file Form X with Form by the deadline. Include a statement saying that an amended claim will be filed as soon as the necessary tax information is available. File the amended Form X as soon as you get the needed tax information. If a member of the Armed Forces dies, a surviving spouse or personal representative handles duties such as filing any tax returns and claims for refund involving tax forgiveness.
A personal representative can be an executor, administrator, or anyone who is in charge of the decedent's assets. Whether a credit or refund is requested, generally, the period for filing the claim is 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever is later. If the decedent's return was filed before it was due, it will be considered filed on the regular due date , usually April If the death occurred in a combat zone or from wounds, disease, or injury incurred in a combat zone, the deadline for filing a claim for credit or refund is extended using the rules discussed later under Are There Filing, Tax Payment, and Other Extensions Specifically for Those in a Combat Zone or a Contingency Operation.
This section discusses the procedures members of the Armed Forces should follow when filing their federal income tax returns. These same rules apply when the return is filed on behalf of a member of the Armed Forces, for example, by a tax preparer or by a surviving spouse or personal representative. Special rules apply when filing returns for those involved in a combat zone or a contingency operation. For federal tax purposes, marriages of couples of the same sex are treated the same as marriages of couples of the opposite sex.
You must select married, or married filing separately, as your filing status. What is my filing status if I am in a registered domestic partnership, civil union, or other similar relationship? If you have entered into a registered domestic partnership, civil union, or other similar relationship that isn't considered a marriage under state or foreign law, you aren't considered married for federal tax purposes.
You must select single or head of household if eligible as your filing status. For more details, see Pub. Electronic filing e-filing of your tax return. You are encouraged to e-file your return. Eight in 10 taxpayers get their refunds faster by using direct deposit and e-file. Go to IRS. If you e-file your return, there is no need to mail it. A tax return for Forgiveness of Decedent's Tax Liability , discussed earlier, must be filed on paper.
If you choose to file a federal income tax return on paper and you aren't claiming tax forgiveness on the return, send your federal tax return to the Internal Revenue Service Center for the place where you live. The Instructions for Form give the address for the service centers. Kane, who is stationed in Maine but whose permanent home address is in California, should send her federal return to the service center for Maine.
Most individuals must file their tax returns by the regular due date. You may be eligible for an extension. Some extensions are automatic, some aren't. For calendar year taxpayers, the regular due date is April 15 of the following year. If April 15 falls on a Saturday, Sunday, or legal holiday, your tax return is considered timely filed if it is filed by the next business day that isn't a Saturday, Sunday, or legal holiday.
For tax returns, the due date is April 15, You should always pay your tax by the regular due date for filing your return. An extension of time to file doesn't mean you have an extension of time to pay any tax due. You must estimate your tax due and pay it by the regular due date for the return unless you qualify for one of the extensions described in Can I delay my payment of income taxes next. You don't have to send in any payment of tax due when you file Form However, if you pay the tax after the regular due date, you will be charged interest from the regular due date to the date the tax is paid.
You also may be charged a penalty for paying the tax late unless you have reasonable cause for not paying your tax when due. You can pay your taxes by authorizing an electronic funds withdrawal from your checking or savings account. For the various ways to electronically pay your taxes, see your tax return instructions or visit IRS. Or you can mail a Form V with the payment. If you are a member of the Armed Forces, you may qualify for an extension of time to pay income tax that becomes due before or during your military service.
If you serve in a combat zone, have qualifying service outside a combat zone, or are outside the United States in a contingency operation, you may be eligible for the extension discussed in Are There Filing, Tax Payment, and Other Extensions Specifically for Those in a Combat Zone or a Contingency Operation , later.
If you are unable to pay the tax owed by the end of the extension period, you may want to ask the IRS for an installment payment agreement that reflects your ability to pay the tax owed. To do that, go online to IRS. In this section, we discuss extensions of the deadlines for tax return filing, tax payments, and other actions. We discuss extensions related to combat zone service and contingency operations, and those not related to combat zone service and contingency operations. If you aren't in a combat zone or a contingency operation, you still may be eligible for an extension of time to file your return.
Different rules apply depending on whether you live inside or outside the United States. If you are inside the United States, you can receive an automatic 6-month extension to file your return if you either file Form , or pay any part of your expected tax due by credit or debit card, by the regular due date of your return. You can file Form electronically or on paper.
See Form for details. The extension of time to file is automatic, and you won't receive any notice of approval. However, your request for an extension will be denied if it isn't made timely. The IRS will inform you of the denial. You can't use the automatic extension if you choose to have the IRS figure the tax or you are under a court order to file your return by the regular due date. Where on my return do I enter the amount paid with my request for an extension?
Enter the amount you paid with your request for the extension on Schedule 5 Form , line If you are outside the United States and Puerto Rico, there are two automatic extensions that apply to you and a third extension that is discretionary. Situation 1. Situation 2. You are in military or naval service on an assigned tour of duty outside the United States and Puerto Rico for a period that includes the entire due date of the return. You will be charged interest on any amount not paid by the regular due date until the date the tax is paid. If you use this automatic extension, you must attach a statement to the return showing that you are described in Situation 1 or 2 above.
A married couple filing a joint return is given the automatic 2-month extension if one of the spouses met the requirement under Situation 1 or Situation 2 above.
For married persons filing separate returns, only the spouse who satisfies the criteria in Situation 1 or Situation 2 qualifies for the automatic 2-month extension. The additional automatic 4-month extension Form You can request an additional 4-month extension by filing Form by June 17, , for a calendar-year tax return.
Check the box on line 8. This will extend your due date to October 15, , if you are a calendar-year taxpayer. In addition to the 6-month extension automatic 2-month and additional automatic 4-month extensions , you can request a discretionary 2-month additional extension of time to file your return to December 15, , if you are a calendar-year taxpayer. To request this extension, you must send the Internal Revenue Service a letter explaining the reasons why you need the additional 2 months. Send the letter by the extended due date October 15, , if you are a calendar-year taxpayer to the following address:.
You will not receive any notification from the Internal Revenue Service unless your request is denied. The postponements for filing, tax payment, and the other actions listed in For Which Actions Are My Deadlines Extended , later, such as collection and examination actions, are specifically for persons in the Armed Forces in combat zones or contingency operations.
As noted in some of our earlier discussions, these postponements are referred to as "extensions of deadlines. You serve in the Armed Forces in a combat zone or you have qualifying service outside of a combat zone. You serve in the Armed Forces on deployment outside the United States away from your permanent duty station while participating in a contingency operation. A contingency operation is a military operation that is designated by the Secretary of Defense or results in calling members of the uniformed services to active duty or retains them on active duty during a war or a national emergency declared by the President or Congress.
Time in a missing status missing in action or prisoner of war counts as time in a combat zone or a contingency operation. Deadlines also are extended if you are serving in a combat zone or a contingency operation in support of the Armed Forces. This applies to Red Cross personnel, accredited correspondents, and civilian personnel acting under the direction of the Armed Forces in support of those forces.
Spouses of individuals who served in a combat zone or contingency operation are entitled to the same deadline extensions with two exceptions. The extension doesn't apply to a spouse for any tax year beginning more than 2 years after the date the area ceases to be a combat zone or the operation ceases to be a contingency operation.
The extension doesn't apply to a spouse for any period the qualifying individual is hospitalized in the United States for injuries incurred in a combat zone or contingency operation. Your deadline for filing your return, paying your tax, claiming a refund, and taking other actions with the IRS is extended in two steps. The last day you are in a combat zone, have qualifying service outside of the combat zone, or serve in a contingency operation or the last day the area qualifies as a combat zone or the operation qualifies as a contingency operation.
The last day of any continuous qualified hospitalization defined later for injury from service in the combat zone or contingency operation or while performing qualifying service outside of the combat zone. Second, in addition to the days, your deadline is extended by the number of days that were left for you to take the action with the IRS when you entered a combat zone or began performing qualifying service outside the combat zone or began serving in a contingency operation.
If you entered the combat zone or began serving in the contingency operation before the period of time to take the action began, your deadline is extended by the entire period of time you have to take the action. She remained there through March 31, , when she departed for the United States.