As a military service member – do you have the same tax filing deadline or requirements as U.S. citizens? Are there tax filing extensions available for deployed members of the services? In this blog, we will explore this very complicated area of tax code.
First and foremost, it is important to note that all military service members are offered the same filing extensions that are available to all taxpaying U.S. citizens and residents. Generally, the annual due date for filing and paying individual income tax returns is April 15. If April 15 falls on a weekend or holiday, the due date is the next available workday. Extensions are requested by filing Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return, which can be submitted electronically or by mail.
It is important to remember that an extension to file a tax return is not an extension to pay any taxes due. Generally, if tax is owed on an income tax return and not paid by the original due date of the return, not including extensions, the payment is considered late. This means if you file an extension knowing that you will owe additional taxes, even if you file on time and pay the balance due when you file, the payment is considered to be late. Interest, and possibly penalties, may accrue on the unpaid balance until it is paid in full.
There are other extension dates available to taxpayers and military service members if they qualify. These extensions include:
June 15:
If a taxpayer is residing outside of the United States and Puerto Rico and has their main business outside of the U.S. and Puerto Rico as well, they automatically qualify for an extended due date of June 15. Military service members who are serving abroad may also take advantage of the June 15 filing deadline. For those who qualify, the June 15 deadline is not only an extension to file, but an extension to pay. If a taxpayer living abroad or a service member serving outside of the U.S. or Puerto Rico still needs additional time to file their return, Form 4868 should be filed by June 15. If the balance due is not paid by June 15, interest and penalties may begin to accrue until the balance is paid in full. If a U.S. citizen, resident, or service member living abroad chooses to use this extension, they should be sure to check Box 8 when filing Form 4868.
October 15:
When filing Form 4868, taxpayers automatically qualify for an extension until October 15, whether the taxpayer’s or military service member’s original due date was April 15 or June 15. Keep in mind that any tax that was not paid by April 15 or June 15, respectively, is subject to interest and possible penalties. In most cases, interest cannot be waived and will continue to accumulate until the tax is completely paid. However, it is possible to abate several penalties that may be assessed. For more information about penalty abatement, please take a look at our Penalty Abatement webpage.
Combat Zone or Contingency Operation Extension
There is one extension that is unique to military service members, and that is the combat zone or contingency operation extension.
Qualified service includes:
- Service in a Presidentially declared combat zone
- Service in a contingency operation if away from the servicemember’s permanent duty station
- Service in an action that becomes a contingency operation
This extension is unique because it suspends the initial filing deadline and payment due date for the service member. A new filing date will need to be determined based on when the service member was in the combat zone and when they returned home. No interest or late payment penalties apply until that new filing date has been decided. If you are curious about how this new filing date is calculated, there is the two-step formula you can use:
- The suspension period is typically 180 days after the later of either:
- The last day the service member was in a combat zone or involved in a contingency operation, or the last day the area is considered a combat zone, or the date the contingency operation concludes if the service member remains in the area, or the number of days that a service member is missing from a combat zone or contingency area, OR
- The last day of any continuous qualified hospitalization that resulted from injury from the service member’s service in a combat zone or contingency operation. For this purpose, qualified means any hospitalization outside of the U.S., or up to a five-year hospital stay if in the U.S.
Now add:
- The number of days that were left to reply to the IRS regarding a specific action the taxpayer left uncompleted when they entered the combat zone or began service in a contingency operation.
The actions that qualify for a deadline extension include:
- Filing any return of estate, gift, employment, or excise tax
- Payment of any income, estate, gift, employment, or excise tax or any installment thereof, or of any other liability to the United States in respect thereof
- Filing a petition with the Tax Court for redetermination of a deficiency or for review of a decision rendered by the Tax Court
- Allowance of a credit or refund of any tax
- Filing a claim for credit or refund of any tax
- Bringing suit upon any such claim for credit or refund
- Assessment of any tax
- Giving or making any notice or demand for the payment of any tax, or with respect to any liability to the United States in respect of any tax
- Collection, by the Secretary, by levy or otherwise, of the amount of any liability in respect of any tax (except any period of hospitalization or the 180 days thereafter does not suspend collection activities)
- Bringing suit by the United States, or any officer on its behalf, in respect of any liability in respect of any tax
- Any other act required or permitted under the internal revenue laws specified by the Secretary.
Here is an example.
Sergeant Jones was deployed to Kabul, Afghanistan, and arrived on March 1, 2021, where she served until August 1, 2021. She was unable to complete the preparation of her 2020 personal income tax return Form 1040, U.S. Individual Income Tax Return, before she was deployed. Sergeant Jones will need to file her return when she returns to Camp Pendleton, where she is stationed. Because of the continued COVID-19 Pandemic, the due date to file 2020 Form 1040 was extended from April 15, 2021, to May 17, 2021. From the date Sergeant Jones entered Kabul, March 1, 2021, to the due date of the 2020 Form 1040 (May 17, 2021) is 78 days. Sergeant Jones will have 258 days (April 15, 2022) to timely file her 2020 Form 1040.
These are just a few actions that qualify military personnel to a deadline extension. However, every person’s tax situation is different, so if you would like to get more details that fit your particular situation, the
IRS website has a wealth of information you can peruse. And if you would like to take the guessing game out of this process entirely, we recommend looking for a tax professional near you (particularly someone who specializes in military and veteran tax issues) who can walk you through the filing and extension process and, in turn, provide you with a little more peace of mind.