If you serve in the Armed Forces in a designated Combat Zone/Qualified Hazard Duty Area or have qualifying service outside a Combat Zone/Qualified Hazard Duty Area, you automatically receive a 180 day extension for filing tax returns, paying taxes, filing claims for refunds, and taking other actions with the IRS.

Additionally, if you are deployed overseas away from your permanent duty station in support of operations in a qualified hazardous duty area, but outside the qualified hazardous duty area, you also receive these extensions (but not other combat zone benefits). The deadline for IRS to take certain actions, such as collection and examination actions, is also extended.

Your deadline is extended for 180 days after the later of:

• The last day you are in a combat zone/qualified hazardous duty area or have qualifying service outside of the combat zone/qualified hazardous duty area (or the last day the area qualifies as a combat zone or qualified hazardous duty area), or
• The last day of any continuous qualified hospitalization (defined later) for injury from service in the combat zone/qualified hazardous duty area or while performing qualifying service outside of the combat zone/qualified hazardous duty area.

In addition to the 180 days, your deadline is also extended by the number of days that were left for you to take the action with the IRS when you entered a combat zone/qualified hazardous duty area (or began performing qualifying service outside the combat zone/qualified hazardous duty area). If you entered the combat zone/qualified hazardous duty area (or began performing qualifying service outside the combat zone/qualified hazardous duty area) before the period of time to take the action began, your deadline is extended by the entire period of time you have to take the action.

For example, you had 3 1/2 months (January 1 - April 15) to file your 2002 tax return. Any days of this 3 1/2 month period that were left when you entered the combat zone (or the entire 3 1/2 months if you entered the combat zone by January 1) are added to the 180 days when determining the last day allowed for filing your 2002 tax return.

If the IRS takes any actions covered by these provisions or sends you a notice of examination before learning that you are entitled to an extension of the deadline, contact your legal assistance office. No penalties or interest will be imposed for failure to file a return or pay taxes during the extension period.

 

COMBAT ZONE PAY

If you are a member of the U.S. Armed Forces who serves in a combat zone (defined below), you can exclude certain pay from your income. Enlisted personnel, warrant officers, and commissioned warrant officers can exclude the following amounts from their income:

• 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 DOD 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 non-appropriated 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 that are attributable to your period of service in a combat zone (provided a full year's service is performed to earn the repayment).

You do not have to receive the pay while you are in a combat zone, are hospitalized, or in the same year you served in a combat zone. However, your entitlement to the pay must have fully accrued in a month during which you served in the combat zone or were hospitalized as a result of wounds, disease, or injury incurred while serving in the combat zone.

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

Definition of Combat Zone
A combat zone is any area the President of the United States designates by Executive Order as an area in which the U.S. Armed Forces are engaging or have engaged in combat. An area usually becomes a combat zone and ceases to be a combat zone on the dates the President designates by Executive Order.

Afghanistan. By Executive Order No. 13239, Afghanistan (and airspace above) is designated a combat zone beginning September 19, 2001.

The Kosovo area. By Executive Order No. 13119 and Public Law 106-21, the following locations (including air space) were designated as a combat zone and a qualified hazardous duty area beginning March 24, 1999.

• Federal Republic of Yugoslavia (Serbia/Montenegro)
• Albania
• The Adriatic Sea
• The Ionian Sea - north of the 39th parallel (including all of the airspace in connection with the Kosovo operation.)

Persian Gulf area. By Executive Order No. 12744, the following locations (and airspace) were designated as a combat zone beginning January 17, 1991.

• The Persian Gulf
• The Red Sea
• The Gulf of Oman
• The part of the Arabian Sea that is north of 10 degrees north latitude and west of 68 degrees east longitude
• The Gulf of Aden
• The total land areas of Iraq, Kuwait, Saudi Arabia, Oman, Bahrain, Qatar, and the United Arab Emirates

Serving in a Combat Zone

• Service in a combat zone includes any periods you are absent from duty because of sickness, wounds, or leave.
• If, as a result of serving in a combat zone, a person becomes a prisoner of war or is missing in action, that person is considered to be serving in the combat zone so long as he or she keeps that status for military pay purposes.
• You are considered to be serving in a combat zone if you are either assigned on official temporary duty to a combat zone or you qualify for hostile fire/imminent danger pay while in a combat zone.

Non-qualifying presence in combat zone. The following military service does not qualify as service in a combat zone:

• Presence in a combat zone while on leave from a duty station located outside the combat zone,
• Passage over or through a combat zone during a trip between 2 points that are outside a combat zone, and
• Presence in a combat zone solely for your personal convenience.

Qualified hazardous duty area. Beginning November 21, 1995, a "qualified hazardous duty area" in the former Yugoslavia is treated as if it were a combat zone. The qualified hazardous duty area includes:

• Bosnia and Herzegovina
• Croatia
• Macedonia

Members of the Armed Forces deployed overseas away from their permanent duty station in support of operations in a qualified hazardous duty area, or performing qualifying service outside the qualified hazardous duty area, are treated as if they are in a combat zone solely for the purposes of the extension of deadlines. These personnel are not entitled to other combat zone tax benefits. However, if you satisfy additional requirements, you may be entitled to full combat zone tax benefits:

Qualifying service outside combat zone. Military service outside a combat zone is considered to be performed in a combat zone if:

• The service is in direct support of military operations in the combat zone, and
• The service qualifies you for special military pay for duty subject to hostile fire or imminent danger.

Military pay received for this service will qualify for the combat zone exclusion if the other requirements are met.

Amount of Exclusion
If you are an enlisted member, warrant officer, or commissioned warrant officer and you serve in a combat zone during any part of a month, all of your military pay for that month is excluded from your income. You can also exclude military pay earned while you are hospitalized as a result of wounds, disease, or injury incurred in the combat zone. The exclusion of your military pay while you are hospitalized does not apply to any month that begins more than 2 years after the end of combat activities in that combat zone. Your hospitalization does not have to be in the combat zone.

If you are a commissioned officer (other than a commissioned warrant officer), you may exclude your pay according to the rules just discussed. However, the amount of your exclusion is limited to the highest rate of enlisted pay (plus imminent danger/hostile fire pay you received) for each month during any part of which you served in a combat zone or were hospitalized as a result of your service there.

Hospitalized while serving in the combat zone. If you are hospitalized while serving in the combat zone, the wound, disease, or injury causing the hospitalization will be presumed to have been incurred while serving in the combat zone unless there is clear evidence to the contrary.

Hospitalized after leaving the combat zone. In some cases the wound, disease, or injury may have been incurred while you were serving in the combat zone, even though you were not hospitalized until after you left.

Form W-2. The wages shown in box 1 of your 2002 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.