Little Known Facts About Combat Zone
Exclusions
Many servicemembers are not aware of the tax breaks they get while
serving in an area that is determined to be a "Combat Zone." In addition
many don't even know what is considered a combat zone.
Combat zones
are designated by the President as areas in which the U.S. Armed Forces
are engaging or have engaged in combat. There are currently three such
combat zones (including the airspace above each):
- Arabian Peninsula Areas, beginning Jan. 17, 1991 -- the Persian
Gulf, Red Sea, Gulf of Oman, the part of the Arabian Sea north of 10°
North latitude and west of 68° East longitude, the Gulf of Aden, and the
countries of Bahrain, Iraq, Kuwait, Oman, Qatar, Saudi Arabia and the
United Arab Emirates.
- Kosovo area, beginning Mar. 24, 1999 -- Federal Republic of
Yugoslavia (Serbia and Montenegro), Albania, the Adriatic Sea and the
Ionian Sea north of the 39th Parallel. Including three parts of the
former Yugoslavia are designated as Qualified Hazardous Duty Areas, to
be treated as if it were a combat zone, beginning Nov. 21, 1995 --
Bosnia and Herzegovina, Croatia, and Macedonia.
- Afghanistan, beginning Sept. 19, 2001.
In addition, the
Department of Defense has certified these locations for combat zone tax
benefits due to their direct support of military operations, beginning on
the listed dates:
In support of Operation Enduring Freedom (Afghanistan combat
zone):
- Pakistan, Tajikistan and Jordan - Sept. 19, 2001
- Incirlik Air Base, Turkey - Sept. 21, 2001
- Kyrgyzstan and Uzbekistan - Oct. 1, 2001
- Philippines (only troops with orders referencing Operation Enduring
Freedom) - Jan. 9, 2002
- Yemen - Apr. 10, 2002
- Djibouti - July 1, 2002
In support of Operation Iraqi
Freedom (Arabian Peninsula Areas combat zone):
- Turkey - Jan. 1, 2003
- Israel - Jan. 1 through July 31, 2003
- the Mediterranean Sea east of 30° East longitude - Mar. 19 through
July 31, 2003
- Jordan - Mar. 19, 2003
- Egypt - Mar. 19 through Apr. 20, 2003
Military Pay
Chances are that if you serve or have served in
a combat zone you know it. But you may not have known that any military
pay earned in a combat zone that is excluded from gross income will not
appear on your Form W-2 in the box marked "Wages, tips, other
compensation." However, this military pay is subject to social security
and medicare taxes and will appear on your Form W-2 in the boxes marked
"Social security wages" and "Medicare wages and tips."
If you
believe you are entitled to the military pay exclusion, but it is not
reflected on your W-2, ask your service branch to issue a corrected Form
W-2.
Calling Home
In addition you may not know that
telephone calls that originate within a combat zone from members of the
U.S. Armed Forces serving there are exempt from the normal federal excise
tax.
To take advantage of this tax break you must furnish a
certificate of exemption to the telephone company receiving payment for
the call. You can create this document for yourself, the following is a
sample format for an exemption certificate:
EXEMPTION CERTIFICATE
(Overseas Telephone
Calls)
(Date)__________.
I certify that the toll charges of $.......... are for telephone or
radio telephone messages originating at..............(Point of origin)
within a combat zone from..............(Name) a member of the Armed Forces
of the United States performing service in such combat zone; that the
transmission facilities were furnished by ......(Name of carrier); and
that the charges are exempt from tax under section 4253(d) of the Internal
Revenue Code.
(Signature of Subscriber)
(Address)
Note: Penalty for fraudulent use: fine or
imprisonment or both.
If you've already paid an excise tax on that
toll telephone service, you may obtain a refund either from the telephone
service provider that collected the excise tax, or from the IRS by filing
Form 8849, Claim for Refund of Excise Taxes, with its Schedule
6.
For more information on making the most of these and many other
military tax breaks visit the Military.com Military Tax
Center.
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