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Publication 3

Armed Forces' Tax Guide


What's New(p1)

Achieving a Better Life Experience (ABLE) account.(p1)
This is a new type of account. For 2015, you can contribute up to $14,000. Distributions are tax free if used to pay the beneficiary’s qualified disability expenses. For details, see Pub. 907 and the instructions for your tax return.
Due date of return.(p1)
File Form 1040 by April 18, 2016. The due date is April 18, instead of April 15, because of the Emancipation Day holiday in the District of Columbia—even if you do not live in the District of Columbia. If you live in Maine or Massachusetts, you have until April 19, 2016. That is because of the Patriots’ Day holiday in those states.
Direct deposits of refund to a myRA® account. (p1)
You now can have your refund directly deposited to a new retirement savings program called myRA®. This is a starter retirement account offered by the Department of the Treasury. See the instructions for your tax return. For more information and to open a myRA account online, visit
Health coverage tax credit.(p1)
The health coverage tax credit, which expired at the end of 2013, has been reinstated retroactive to January 1, 2014. To determine eligibility and to see how to claim the credit for 2014 and 2015, see Form 8885 and its instructions.
Additional child tax credit.(p1)
You cannot claim the additional child tax credit if you file Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion. See Schedule 8812 and its instructions.
IRS collection period shortened. (p1)
A period of continuous qualified hospitalization is no longer considered when computing the IRS collection deadline. See Actions for Which Deadlines Are Extended, later.
Earned income credit.(p2)
The maximum income you can earn and still claim the earned income credit has increased. You may be able to take the earned income credit if you earned less than $47,747 ($53,267 for married filing jointly) if you have three or more qualifying children; $44,454 ($49,974 for married filing jointly) if you have two qualifying children; $39,131 ($44,651 for married filing jointly) if you have one qualifying child; and $14,820 ($20,330 for married filing jointly) if you do not have any qualifying children. See Earned Income Credit, later, under Credits.
Standard mileage rate.(p2)
The standard mileage rate for the cost of operating your car for business use in 2015 is 57.5 cents a mile. The standard mileage rate for operating your car during 2015 to get medical care or to move is 23 cents a mile. The standard mileage rate for charitable use of your vehicle is 14 cents a mile.


Change of address.(p2)
If you change your mailing address, be sure to notify the Internal Revenue Service (IRS) using Form 8822, Change of Address. Mail it to the Internal Revenue Service Center for your old address. (Addresses for the Service Centers are on the back of the form.) Use Form 8822-B, Change of Address or Responsible Party—Business, if you are changing a business address.
Third party designee.(p2)
You can check the "Yes" box in the Third Party Designee area of your return to authorize the IRS to discuss your return with your preparer, a friend, a family member, or any other person you choose. This allows the IRS to call the person you identified as your designee to answer any questions that may arise during the processing of your tax return. It also allows your designee to perform certain actions. See your income tax instructions for details.
Future developments.(p2)
For the latest information about developments related to Pub. 3, such as legislation enacted after it was published, go to
Photographs of missing children.(p2)
The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.


This publication covers the special tax situations of active members of the U.S. Armed Forces. It does not cover military pensions or veterans' benefits or give the basic tax rules that apply to all taxpayers. For information on military pensions or veterans' benefits, see Pub. 525, Taxable and Nontaxable Income. If you need the basic tax rules or information on another subject not covered here, you can check our other free publications. See Pub. 910, IRS Guide to Free Tax Services, for a list and descriptions of the different tax publications.
For federal tax purposes, the U.S. Armed Forces includes commissioned officers, warrant officers, and enlisted personnel in all regular and reserve units under control of the Secretaries of the Defense, Army, Navy, and Air Force. The U.S. Armed Forces also includes the Coast Guard. The Public Health Service also can receive many of the same tax benefits. The U.S. Armed Forces does not include the U.S. Merchant Marine or the American Red Cross.
Members serving in an area designated or treated as a combat zone are granted special tax benefits. In the event an area ceases to be a combat zone, the IRS will do its best to notify you. Many of the relief provisions will end at that time.

Comments and suggestions.(p2)

We welcome your comments about this publication and your suggestions for future editions.
You can send us comments from Click on "More Information" and then on "Give us feedback."
Or you can write to:

Internal Revenue Service
Tax Forms and Publications
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224

We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence.
Although we can't respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products.
Ordering forms and publications.(p2)
Visit to download forms and publications. Otherwise, you can go to to order current and prior-year forms and instructions. Your order should arrive within 10 business days.
Tax questions.(p2)
If you have a tax question not answered by this publication, check and How To Get Tax Help at the end of this publication.


Useful items

You may want to see:

 54 Tax Guide for U.S. Citizens and Resident Aliens Abroad
 463 Travel, Entertainment, Gift, and Car Expenses
 501 Exemptions, Standard Deduction, and Filing Information
 503 Child and Dependent Care Expenses
 505 Tax Withholding and Estimated Tax
 516 U.S. Government Civilian Employees Stationed Abroad
 519 U.S. Tax Guide for Aliens
 521 Moving Expenses
 523 Selling Your Home
 525 Taxable and Nontaxable Income
 527 Residential Rental Property
 529 Miscellaneous Deductions
 559 Survivors, Executors, and Administrators
 590-A Contributions to Individual Retirement Arrangements (IRAs)
 596 Earned Income Credit (EIC)
 970 Tax Benefits for Education
 3920 Tax Relief for Victims of Terrorist Attacks
Form (and Instructions)
 1040X: Amended U.S. Individual Income Tax Return
 1310: Statement of Person Claiming Refund Due a Deceased Taxpayer
 2848: Power of Attorney and Declaration of Representative
 3903: Moving Expenses
 4868: Application for Automatic Extension of Time To File U.S. Individual Income Tax Return
 8822: Change of Address
 8822-B: Change of Address or Responsible Party—Business
 9465: Installment Agreement Request
See How To Get Tax Help near the end of this publication for information about getting IRS publications and forms.

Gross Income(p3)

Members of the Armed Forces receive many different types of pay and allowances. Some are included in gross income while others are excluded from gross income. Included items (Table 1) are subject to tax and must be reported on your tax return. Excluded items (Table 2) are not subject to tax, but may have to be shown on your tax return.
For information on the exclusion of pay for service in a combat zone and other tax benefits for combat zone participants, see Combat Zone Exclusion and Extension of Deadlines, later.

Table 1. Included Items

These items are included in gross income, unless the pay is for service in a combat zone.

Basic pay• Active duty Special • Special duty assignment pay
 • Attendance at a designated service  pay (cont'd)• Veterinarian
  school  • Voluntary Separation Incentive
 • Back wages   
 • CONUS COLA Bonus pay  • Career status
 • Drills      • Enlistment
 • Reserve training    • Officer
 • Training duty     • Overseas extension
      • Reenlistment
Special • Aviation career incentives    
pay• Career sea Other pay  • Accrued leave
 • Diving duty     • High deployment per diem
 • Foreign duty (outside the 48 contiguous    • Personal money allowances paid to
  states and the District of Columbia)     high-ranking officers
 • Foreign language proficiency     • Student loan repayment from programs
 • Hardship duty    such as the Department of Defense
 • Hostile fire or imminent danger     Educational Loan Repayment Program
 • Medical and dental officers     when year's service (requirement) is not
 • Nuclear-qualified officers     attributable to a combat zone
 • Optometry    
 • Other Health Professional Special Pays Incentive pay  • Submarine
  (for example, nurse, physician     • Flight
  assistant, social work, etc.)    • Hazardous duty
  • Pharmacy    • High Altitude/Low Opening (HALO)
 • Special compensation for assistance   
  with activities of daily living (SCAADL)    

Basic allowance for housing (BAH).(p3)

You can still deduct mortgage interest and real estate taxes on your home if you pay these expenses with your BAH.

Table 2. Excluded Items

The exclusion for certain items applies whether the item is furnished in kind or is a reimbursement or allowance. There is no exclusion for the personal use of a government-provided vehicle.

Combat • Compensation for active service while Living• BAH (Basic Allowance for Housing)
zone pay in a combat zone allowances• BAS (Basic Allowance for Subsistence)
 Note: Limited amount for officers   • Housing and cost-of-living allowances abroad paid by the U.S. Government or by a foreign government
   • OHA (Overseas Housing Allowance)
Other pay• Defense counsel services   
 • Disability, including payments received Moving • Dislocation
   a for injuries incurred as a direct result  allowances• Military base realignment and
   of a terrorist or military action   closure benefit
 • Group-term life insurance    (the exclusion is limited as
 • Professional education    described above)
 • ROTC educational and subsistence  • Move-in housing
   allowances   • Moving household and
 • State bonus pay for service in a    personal items
  combat zone  • Moving trailers or mobile homes
 • Survivor and retirement protection   • Storage
  plan premiums  • Temporary lodging and
 • Uniform allowances    temporary lodging expenses
 • Uniforms furnished to enlisted    
  personnel  Travel • Annual round trip for dependent
   allowances students
Death • Burial services   • Leave between consecutive
allowances• Death gratuity payments to   overseas tours
  eligible survivors   • Reassignment in a dependent
 • Travel of dependents to burial site    restricted status
    • Transportation for you or your
Family • Certain educational expenses for    dependents during ship overhaul
allowances dependents    or inactivation
 • Emergencies   • Per diem
 • Evacuation to a place of safety     
 • Separation  In-kind military • Dependent-care assistance program
   benefits• Legal assistance
    • Medical/dental care
    • Commissary/exchange discounts
    • Space-available travel on government aircraft

Death gratuity.(p3)

Any death gratuity paid to a survivor of a member of the Armed Forces is excluded from gross income.

Differential wage payments.(p3)

Differential wage payments are any payments made by an employer to an individual for a period during which the individual is performing service in the uniformed services while on active duty for a period of more than 30 days and that represent all or a portion of the wages the individual would have received from the employer if the individual were performing services for the employer. These amounts are taxable and cannot be excluded as combat pay.

Military base realignment and closure benefit.(p3)

Payments made under the Homeowners Assistance Program (HAP) generally are excluded from income. However, the excludable amount cannot be more than the maximum amount described in subsection (c) of 42 USC 3374 as in effect on November 6, 2009. Any part of the payment that is more than this limit is included in gross income. For more information about the HAP, see

Qualified reservist distribution (QRD).(p3)

A QRD is a distribution to an individual of all or part of the individual's balance in a cafeteria plan or health flexible spending arrangement if:A QRD is included in gross income and is subject to employment taxes. The employer must include the QRD (reduced by after-tax contributions to the health flexible spending arrangement) as wages on Form W-2, Wage and Tax Statement.

Thrift Savings Plan (TSP) distributions.(p3)

If you participate in the Uniformed Services TSP and receive a distribution from your account, the distribution is generally included in your taxable income.
If your contributions included tax-exempt combat zone pay, the part of the distribution attributable to those contributions is tax exempt. However, the earnings on the tax-exempt portion of the distribution are taxable. The TSP will provide a statement showing the taxable and non-taxable portions of the distribution.

Roth Thrift Savings Plan (TSP) balance.(p4)

You may be able to contribute to a designated Roth Account through the TSP known as the Roth TSP. Roth TSP contributions are after-tax contributions, subject to the same contribution limits as the traditional TSP. Qualified distributions from a Roth TSP are not included in your income. For more details, see Thrift Savings Plan in Part II of Pub. 721, Tax Guide to U.S. Civil Service Retirement Benefits.

State bonus payments.(p4)

Bonus payments made by a state (or a political subdivision thereof) to a member or former member of the uniformed services of the United States or to a dependent of such member are considered combat pay (and therefore may not be taxable) if the payments are made only because of the member's service in a combat zone. See Combat Zone, later, for a list of designated combat zones.

Foreign Source Income(p4)

If you are a U.S. citizen with income from sources outside the United States (foreign income), you must report all of that income (except for amounts that U.S. law allows you to exclude) on your tax return. This is true whether you reside inside or outside the United States and whether or not you receive a Form W-2 or a Form 1099. This applies to earned income (such as wages and tips) as well as unearned income (such as interest, dividends, capital gains, pensions, rents, and royalties).
Certain taxpayers can exclude income earned in foreign countries. For 2015, this exclusion amount can be as much as $100,800. However, the foreign earned income exclusion does not apply to the wages and salaries of military and civilian employees of the U.S. Government. Employees of the U.S. Government include those who work at United States Armed Forces exchanges, commissioned and noncommissioned officers' messes, Armed Forces motion picture services, and similar personnel. Other foreign income earned by military personnel or their spouses may be eligible for the foreign earned income exclusion. For more information on the exclusion, see Pub. 54.
Residents of American Samoa may be able to exclude income from American Samoa. This possession exclusion does not apply to wages and salaries of military and civilian employees of the U.S. Government. If you need information on the possession exclusion, see Pub. 570, Tax Guide for Individuals With Income From U.S. Possessions.

Military Spouses Residency Relief Act (MSRRA)(p5)

If you are the civilian spouse of an active duty U.S. military servicemember and your domicile is the same as the servicemember's, you can choose to keep your prior residence or domicile for tax purposes when you accompany the servicemember spouse, who is relocating under military orders to a new duty station in one of the 50 states, the District of Columbia, or a U.S. possession. See Pub. 570 for more information.


Your domicile is the permanent legal home you intend to use for an indefinite or unlimited period, and to which, when absent, you intend to return. It is not always where you presently live.

Community Property(p5)

The pay you earn as a member of the Armed Forces may be subject to community property laws depending on your marital status, your domicile, and the nature of the payment. The community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.

Marital status.(p5)

Community property rules apply to married persons whose domicile during the tax year was in a community property state. The rules may affect your tax liability if you file separate returns or are divorced during the year.

Nevada, Washington, and California domestic partners.(p5)

A registered domestic partner in Nevada, Washington, or California generally must report half the combined income of the individual and his or her domestic partner. See Form 8958 and Pub. 555, Community Property.

Nature of the payment.(p6)

Active duty military pay is subject to community property laws. Armed Forces retired or retainer pay may be subject to community property laws.
For more information on community property laws, see Pub. 555.

Form W-2 Codes(p6)

Form W-2 shows your total pay and other compensation and the income tax, social security tax, and Medicare tax that was withheld during the year.
Form W-2 also shows other amounts that you may find important in box 12. The amounts shown in box 12 are generally preceded by a code. A list of codes used in box 12 is shown next.

Form W-2 Reference Guide for Box 12 Codes

AUncollected social security or RRTA JNontaxable sick payTAdoption benefits
 tax on tips    
  K20% excise tax on excess golden VIncome from exercise of
BUncollected Medicare tax on tips (but not Additional Medicare Tax) parachute payments nonstatutory stock option(s)
CTaxable cost of group-term life LSubstantiated employee business WEmployer contributions (including
 insurance over $50,000 expense reimbursements  employee contributions through a
     cafeteria plan) to an employee's
DElective deferrals to a section MUncollected social security or RRTA health savings account (HSA)
 401(k) cash or deferred arrangement  tax on taxable cost of group-term life  
 plan (including a SIMPLE 401(k) insurance over $50,000 (former YDeferrals under a section 409A
 arrangement) employees only) nonqualified deferred
     compensation plan
EElective deferrals under a section NUncollected Medicare tax on taxable  
 403(b) salary reduction agreement cost of group-term life insurance ZIncome under a
   over $50,000 (former employees only)  nonqualified deferred
FElective deferrals under a section    compensation plan that fails to satisfy
 408(k)(6) salary reduction SEPPExcludable moving expense  section 409A
   reimbursements paid directly to   
GElective deferrals and employer  employeeAADesignated Roth contributions
 contributions (including nonelective    under a section 401(k) plan
 deferrals) to a section 457(b) QNontaxable combat pay  
 deferred compensation plan  BBDesignated Roth contributions
  REmployer contributions to an Archer  under a section 403(b) plan
HElective deferrals to a section  MSA  
 501(c)(18)(D) tax-exempt   DDCost of employer-sponsored
 organization planSEmployee salary reduction contributions under a section 408(p) SIMPLE plan health coverage
    EEDesignated Roth contributions under
     a governmental section 457(b) plan

Note. For more information on these codes, see your Form(s) W-2.