Military Personnel, Certain U.S. Civilians Now Eligible for Combat Zone Tax Benefits

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Military Personnel, Certain U.S. Civilians Now Eligible for Combat Zone Tax Benefits

WASHINGTON - President Bush has issued an executive order designating Afghanistan and the airspace above as a combat zone for tax relief purposes, according to a report by tax.CCHGROUP.com.

Executive Order 13239 designates Sept. 19, 2001, as the date on which combatant activities began in the zone. Military pay during months served in the combat zone will be exempt from taxes and will not be subject to income tax withholding under Code Sec. 112.

Separately, the Department of Defense certified that military personnel in Uzbekistan, Kyrgyzstan, Pakistan, Tajikistan and Jordan are eligible for all combat zone-related tax benefits due to their service in direct support of military operations in the Afghanistan combat zone. The effective certification date is Sept. 19, 2001, for Pakistan, Tajikistan, and Jordan, and Oct. 1, 2001, for Kyrgystan and Uzbekistan, a Pentagon official confirmed.

There is a limit on the tax exclusion for commissioned officers in the designated combat zone area, according to a Pentagon official.

Under E.O. 13239, the tax exclusion applies to commissioned officer pay up to $4,893.60 per month, said Lt. Col. Thomas K. Emswiler, executive director of Armed Forces Tax Council at the Department of Defense. An additional $150 per month is excludable from income taxes for military personnel who are eligible to receive hostile fire or imminent danger pay.

Emswiler also said other potential tax benefits under the Internal Revenue Code to the families of military personnel who die or who are missing in action. Code Sec. 692 benefits provide certain income tax relief if an individual dies while serving in a combat zone or is in missing status. Estate tax relief is also provided for members of the armed forces who die while serving in a combat zone.

-- NYSSCPA.org News Staff