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Veterans Day 2010: Tax considerations for members of the military

November 11, 2010

Today is a special day, so momentous that if defies the usual American tendency to diminish holidays in order to accommodate mundane aspects of our lives, such as three-day weekends or retail sales.


Flag_USNov. 11 is Veterans Day.


On the 11th hour of the 11th day of the 11th month of 1918, an armistice, or temporary cessation of hostilities, was declared between the Allied nations and Germany in World War I, then known as the Great War. Armistice Day commemorations began the following year.

In 1938, Nov. 11 became a legal federal holiday in the United States. Following World War II and the Korean War, Armistice Day became known as Veterans Day.

Now each November, this day is dedicated to American veterans of all wars. (It's still called Armistice Day, or Remembrance Day, in Great Britain.) 

We can disagree about the reasons for and decisions made to fight wars. But there is no disputing that the men and women who volunteer to serve in America's armed forces deserve our gratitude and respect, not only on Veterans Day, but every day, during peace time and in conflict.

Thank you to all who have served and are serving.

If you know or see a veteran today, please thank him or her for service to our nation. And if you have a chance to attend one of the many ceremonies across the country today, please do so to show these brave men and women how much you appreciate what they do.

Taxes and members of the military: Members of the military, like us civilians, must pay taxes. However, they do get a some special tax considerations.

Combat pay, compensation that many of our service men and women are receiving right now, is treated differently.

Some of it can be excluded from pay for tax purposes. But military members also can elect to include nontaxable combat pay in earned income for purposes of claiming the Earned Income Tax Credit (EITC).

The IRS has a special Web page with official information on taxes and the military. Also check out the agency's 10 military tax tips and complete information in IRS Publication 3, Armed Forces' Tax Guide.

TaxProf Blog also has a lengthy list of official government links to tax resources for service personnel.

And don't forget about your state.

Many states offer special tax breaks for current members of the military as well as retirees receiving armed services' pension income. Military.com has compiled a comprehensive list of state tax laws affecting service personnel.

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TAX-SAVVY WAYS 
TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

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