Members of the Armed Forces

Discussion in 'Tax' started by manhattan.bob, Feb 26, 2006.

  1. Thanks to anybody who's willing to take a stab at this...
    I'm not looking for an answer to my question so much as
    suggestions on how I might go about getting an answer from
    the IRS, other than by their sueing me for tax evasion...

    I'm a civilian employee of the (US) Department of Defense,
    unaffiliated with any of the military services. Last year,
    however, I deployed to a combat zone and therefore my pay
    from that time period might be tax exempt. For personnel
    falling under the tax exemption, the way it works is that
    your W2 simply does not reflect that you ever earned the
    exempt income. (I think it's only box 1 that doesn't show
    it, but more on that shortly.)

    The problem I'm encountering is twofold:
    1) If your government payroll office doesn't issue a W2
    properly reflecting the exempt pay (by way of not including
    it) you've seemingly got nowhere to go. You can ask them
    about it, but they don't really care because its not their
    2) Assuming I could get the payroll office to issue me a
    corrected W2 if only I could get the IRS to say that I
    qualified, I'm left with the problem that the IRS won't talk
    to me. There seems to be no way to get official
    determinations from them, except by way of lawsuit. I
    called the tax helpline, but the people there seem to be
    allowed only to read to you from official IRS publicatiosn.

    The one option that has occured to me is to file an amended
    return for 2004 now, including a corrected W2 by way of form
    Form 4852 reflecting what I think my wages should have been.
    Seeing as I've already paid the taxes, I don't have to
    worry about any penalty should I do this, and I assume they
    would investigate my claims and make a decision prior to
    just sending me money. But maybe not, so that's a little

    Any suggestions are kindly appreciated.

    Last edited by a moderator: Jan 23, 2018
    manhattan.bob, Feb 26, 2006
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  2. manhattan.bob

    A.G. Kalman Guest

    Civilian employees of the federal government do not qualify
    for exempt combat pay. That privilege only goes to those
    who are serving in the Armed Forces of the U.S. However, it
    is possible that you are eligible for the foreign earned
    income exclusion and the foreign housing exclusion and the
    foreign housing deductions. Your W-2 is correct if your
    wages is included in Box 1. See Chapter 4 in IRS Pub 54, Tax
    Guide for US Citizens & US Residents Abroad.
    Last edited by a moderator: Jan 23, 2018
    A.G. Kalman, Feb 27, 2006
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  3. manhattan.bob

    L K Williams Guest

    I agree that civilian employees of the federal government do
    not qualify for the combat pay exemption. The bad news here
    is that employees of the federal government also do not
    qualify for the foreign earned income exclusion!

    Lanny K. Williams, CPA
    Nawarat, Williams & Co., Ltd.
    Income Tax Services for Expatriate Americans
    Last edited by a moderator: Jan 23, 2018
    L K Williams, Feb 27, 2006
  4. While I appreciate your efforts to answer my question, your
    answer is unacceptable for several reasons, primarily that
    whether you think I qualify or not is irrelevant because you
    are not the IRS. I'm interested either in finding out how I
    may determine my eligibility or a reference to some IRS
    publication that clarifies the matter. It is my belief that
    Publication 3, Armed Forces' Tax Guide, which summarizes 26
    USC 112, is ambiguous on the matter. This is because it
    refers only to "enlisted personnel" and "commissioned
    officers". While I obviously am not enlisted, I may fall
    under the category of commissioned officer. In particular,
    this matter is confused by 26 USC 912(1) and (2) which makes
    reference to "civilian officers and employees of the

    However in researching my reply to your answer I did find 26
    USC 7701(a)(15) which I'd somehow overlooked: "When used in
    this title, where not otherwise distinctly expressed or
    manifestly incompatible with the intent thereof, the term
    'military or naval forces of the United States' and the term
    'Armed Forces of the United States' each includes all
    regular and reserve components of the uniformed services ...

    While I may have had an admittedly weak claim to the term
    'commissioned officer', I certainly am not a member of the
    uniformed services.

    For reference, Pub54 says the US Government employees don't
    qualify for any of the exemptions that it discusses.

    Thanks anyway,
    Last edited by a moderator: Jan 23, 2018
    manhattan.bob, Feb 28, 2006
  5. manhattan.bob

    scott s. Guest

    wrote in
    My commission is from the President of the United States,
    citing 10USC531.

    scott s.
    Last edited by a moderator: Jan 23, 2018
    scott s., Mar 1, 2006
  6. manhattan.bob

    Katie Guest

    I would refer you to Rev. Rul. 60-65, 1960-1 CB 21: A
    National Guardsman on active duty is a member of the armed
    forces, but a civilian surgeon performing the duties of a
    commissioned officer in the U.S. Medical Corps is not.

    Also NOT armed services members:

    A civilian noncombatant employed by the Armed Forces in
    Vietnam - Prusia, Lee, TC Memo 1969-148

    A civilian navigator and pilot employed by a civilian
    airline that transported personnel and materiel to Vietnam
    under a DOD contract - Smith, Noah, TC Memo 1972-147

    You might also want to look at a U.S. Supreme Court case
    from 1949: Commissioner of Internal Revenue v. Connelly, 338
    U.S. 258. That case involved a $1,500 military pay
    exclusion, not the combat pay exclusion, but it's basically
    the same issue, i.e., whether or not the taxpayer was a
    member of the armed forces. The taxpayer in that case had a
    military status for some purposes, but was paid as a
    civilian employee. The Court of Appeals for the District of
    Columbia Circuit found that he was military and entitled to
    the exclusion, but the U.S. Supreme Court overturned that
    decision because he was paid as a civilian. If you want to
    read the case, you can get access it on

    Katie in San Diego
    Last edited by a moderator: Jan 23, 2018
    Katie, Mar 1, 2006
  7. Perhaps you are a NAF employee?

    Anyway, to be excempt, your income must also be subject to
    your resident country's income tax. Only service members
    and civil service types to my knowledge have their exempt
    pay automatically accounted for in the W2

    Harlan Lunsford, EA
    Last edited by a moderator: Jan 23, 2018
    Harlan Lunsford, Jun 2, 2006
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