As you drive to Fort McCoy in your personal vehicle, to provide a blanket of freedom for Americans, do you wonder if Uncle Sam could at least give you ten bucks for some gas money. Well depending on your income, Uncle Sam will provide you around $22 to $38 for of tax deduction gas money for each trip if you claim it correctly on your tax return! Meals and other unreimbursed expenses may be included as well. If you live in Menomonee Falls and you drill at the 128th Air Refueling Wing, sorry, you are out of luck.  The rules say you must travel more than 100 miles to get to your drill before you can tax the tax deduction.

The good news is that no matter where you live Uncle Sam has exempted much of your pay IF,

You were a member of one of the Wisconsin Units that deployed this year:

  • Soldiers of the 127th Infantry, 128th Infantry, or 829th Engineer Company
  • Airmen of the 115th Fighter Wing
  • Individual Mobilization Augmentees (IMAs)
  • Non-Wisconsin units or other units not listed

and

You were deployed or are deployed to Afghanistan and/or the Middle East, Uncle Sam has exempted a great deal of the pay you received while on active duty orders in a combat zone.  (Ch10 or Ch32). Be sure you get those exemptions!

At the time of this writing and according to IRS and DFAS sources, Ukraine is not designated as a combat zone.  Members of the 32nd Brigade Combat Team deployed there will not get the combat zone exemptions unless those members were receiving Hostile Fire Pay (HFP) or Imminent Danger Pay (IDP).

Serving in a combat zone and/or serving in an area designated for HFP or IDP can trigger a multitude of benefits beyond the simple benefits of not paying tax on your base pay. However,  check your LES to make sure DFAS got it right! (They always get it right? Don’t they?) .

Other benefits revolve around the sale of a house, IRA contributions and distributions, and the Earned Income Credit, to name a few, during the time you were in a combat zone/getting HFP or IDP. If any of those apply to you, definitely come in to talk to us.

Tax Management & Financial Horizons

262 923-8100

James Maloney, MSgt (Ret.), USAFR

Extension 700

 

P.S.  Twenty-two years of Active Duty and Reserve and I still don’t know the difference between Hostile Fire Pay and Imminent Danger Pay. If anyone can tell me, I’ll buy you lunch.

P.S.S Some of the sweetest words I ever heard were, “You have just entered United States air space, WELCOME HOME!!!” I hope they still say that.