Current and former members of the United States military spend much of their life serving in defense of the country. However, these soldiers are not exempt from the income tax regulations of the Internal Revenue Service (IRS). All members of the military should take the time to find out about the tax code laws to which they are subject. According to the IRS, some kinds of military income are taxable, while some are exempt from taxation. However, most military personnel will still have to file an income tax return each year. 

Which Military Income is Taxable?

Current members of the military who receive wages or a salary are subject to income tax on their pay. This means that if you are a soldier, and you receive a W-2 form at the end of the year, your income is likely taxable. This also applies to administrative support staff, food service workers, and transportation personnel who work on a military base.

There are a few exceptions to this rule, however. Soldiers and warrant officers who are currently serving in a combat zone do not have to pay tax on their income. Commissioned officers who earn less than a specified income threshold are also exempt from taxation, as are injured personnel who receive pay during a stay in a military hospital. Those who are receiving inpatient care at a hospital are also relieved of the obligation to file an income tax return for that year.

Do Veterans Have to Pay Taxes on Their Benefits?

When it comes to veterans, though, the tax law applies differently. Retired military personnel who are receiving pension income are subject to income taxes on these payments. However, other veterans' benefits are tax-free, including education assistance, disability payments, accessibility grants, and death benefits for surviving family members. Since veterans may be recipients of other types of income or may be filing joint returns with family members who earn regular income, they are still generally required to submit an income tax return each year.

What Records Do Military Personnel Need to Have for Tax Filing Purposes?

When a member of the military files a tax return, he or she needs to access information about current benefits. The Department of Veterans Affairs keeps records of the benefits and assistance paid out to veterans on its website. Before filing a tax return, military personnel can get copies of their tax records and use them to determine which of their benefits are taxable.

Armed with the proper information about their income tax status, members of the military can prepare themselves to file the correct tax forms and remain in compliance with the IRS.