Ok, I am slightly confused and would really appreciate if someone could help clarify things for me. My husband is a reservist currently in Iraq- so I don't have active duty people around me to explain this.

Ok, so- my DH is in Iraq. I keep hearing their pay while over there is not taxed. What pay isn't taxed? Is it all tax free? Or only part of it?
Because when I see his LESs, they take out taxes on each one, so I'm not really sure what is supposed to come out of his money- and what isn't.

So, is none of it taxed? Or only part of it taxed while over there?
And since he has had taxes taken out of each paycheck- do we get it back as a tax return?

Thanks so much- I just don't really understand this.

quote:

Originally posted by miriahw:
Ok, I am slightly confused and would really appreciate if someone could help clarify things for me. My husband is a reservist currently in Iraq- so I don't have active duty people around me to explain this.

Ok, so- my DH is in Iraq. I keep hearing their pay while over there is not taxed. What pay isn't taxed? Is it all tax free? Or only part of it?
Because when I see his LESs, they take out taxes on each one, so I'm not really sure what is supposed to come out of his money- and what isn't.

So, is none of it taxed? Or only part of it taxed while over there?
And since he has had taxes taken out of each paycheck- do we get it back as a tax return?

****Don't understand why they are withholding tax. Overpayments will be refunded to you when you file your tax return. Your question is answered below, there are always qualifiers!!!- You may wish to use the following publication to get a better understanding:

http://www.irs.gov/publications/p3/index.html

If you don't understand something, get back to us and we'll try to help!!-

Thanks so much- I just don't really understand this.

If you are a member of the U.S. Armed Forces who serves in a combat zone (defined later) or a qualified hazardous duty area, you can exclude certain pay from your income. This pay is generally referred to as “combat pay.” You do not actually need to show the exclusion on your tax return because income that qualifies for the combat zone exclusion is not included in the wages reported on your Form W-2.

The month for which you receive the pay must be 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. You do not 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.

If you are an enlisted member, warrant officer, or commissioned warrant officer, you can exclude the following amounts from your income. (Other officer personnel are discussed under Amount of Exclusion, later.)

Active duty pay earned in any month you served in a combat zone.

Imminent danger/hostile fire pay.

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 Department of Defense 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. For example, if you served in a combat zone for 5 months, 5/12 of your repayment qualifies for exclusion.


Retirement pay and pensions do not qualify for the combat zone exclusion.

Partial (month) service. If you serve in a combat zone for any part of one or more days during a particular month, you are entitled to an exclusion for that entire month.

Form W-2. The wages shown in box 1 of your 2007 Form W-2 should not include military pay excluded from your income under the combat zone exclusion provisions. If it does, you will need to get a corrected Form W-2 from your finance office.

You cannot exclude as combat pay any wages shown in box 1 of Form W-2.

Yes, I did find that on a website and have read it.

It says all of my husband's money for the year he is/has been in Iraq isn't taxed. But I am lost because he has had taxes taken out of his money every month. Around $320 a month comes out of his LES.

So, I was wondering how we get that back if it isn't supposed to be taxed? Do we somehow report it on our tax form and get the money back in some type of refund form?
Or are they not supposed to be taking that out of his check each month since his Iraq money says it shouldn't be taxed?

I just don't know why it is taken out of the paycheck if it isn't taxable. and since it is, does that mean we get it back in a lump sum when we file taxes?

quote:

****Don't understand why they are withholding tax. Overpayments will be refunded to you when you file your tax return. Your question is answered below, there are always qualifiers!!!- You may wish to use the following publication to get a better understanding:

http://www.irs.gov/publications/p3/index.html

If you don't understand something, get back to us and we'll try to help!!-

Thanks so much- I just don't really understand this.

oh, sorry, I didn't see that you typed that =)
So, they aren't supposed to be taking it out of each paycheck then? That's what someone said to me. But I wanted to make sure with someone.

So that means when we file our taxes we should get all the money they withheld back at that time? Because, as of now, they have withheld almost $3,000 in taxes...?

quote:

Originally posted by miriahw:

quote:

****Don't understand why they are withholding tax. Overpayments will be refunded to you when you file your tax return. Your question is answered below, there are always qualifiers!!!- You may wish to use the following publication to get a better understanding:

http://www.irs.gov/publications/p3/index.html

If you don't understand something, get back to us and we'll try to help!!-

Thanks so much- I just don't really understand this.

oh, sorry, I didn't see that you typed that =)
So, they aren't supposed to be taking it out of each paycheck then? That's what someone said to me. But I wanted to make sure with someone.

So that means when we file our taxes we should get all the money they withheld back at that time? Because, as of now, they have withheld almost $3,000 in taxes...?

That's correct, Miriah!!!= You may get it ALL back. It's possible that you may even get more back than what was withheld. There are child credits, earned income credits, stimulus payments, etc, all of which may help if you qualify!!=

I've been out of the military for over 50 years and am not familiar with it's payroll departments. I'd suggest your husband connect with it to find out why taxes are being withheld.

Good Luck!!-

"Jack"-

Mariah, I think what Tax missed in your posting was your initial question about your husband's deployment pay.
What should have happened when he was at his Mob station was when he went to Finance and did his paperwork, it was supposed to 'trigger' Federal and State, effectively suspending that money being taken from his pay.
Since that didn't happen, he could either go to Finance when he gets a moment to breath in Theater, or talk to his S1, or just wait until he gets home and files taxes (unless you do them while he's gone).
In the Reserves I've seen a 'refund check' sent to the member's bank account each month, and I've seen it just suspended as soon as they hit the Box...ours was the latter of the two while my girlfriend's husband had the first happen---both men in the same Unit.
Doesn't seem like a whole lot of rhyme or reason to it.
Personally, since he's a Reservist, I'd contact the Rear Detachment (folks left behind in his Unit office) and talk to them about it. They'd be able to help clear this up and/or explain it to you pretty clearly.