The military fight in the most dangerous places. States where there is a low chance of survival. Most of the time, they come out with a limb missing or they are scared mentally for life. It is only right to pay them a little extra for the troubles they went through. That is the aim of combat pay.
Combat pay is a monthly stipend, or a fixed sum of money, given to active members of each U.S. Armed Service who are serving in certain hazardous areas. Combat pay is commonly mixed up with base pay, which is the initial salary or wage paid to those in the Armed Services for their service.
Have you constantly heard the term “combat pay” and wondered what it is? Are you wondering who is eligible for combat pay and how much the pay is? In this article, all of these have been highlighted and many more. Keep reading.
What is combat pay
Combat pay can be classified as all military pay which includes wages earned during a month in which a service member was stationed in a combat zone for at least one day.
Combat pay is a tax-exempt monthly stipend paid to all active members of the U.S. armed services who are serving in designated hazardous zones. It is paid in addition to the person’s base pay.
As a member of the armed services, you would qualify for combat pay if you ate wounded by hostile fire or explosive mines, or on duty on foreign soil and subject to the threat of physical harm or imminent danger due to civil unrest, civil war, terrorism, or wartime conditions.
Combat pay, although excluded from gross income, is still considered during the need analysis for federal student aid purposes. It is reported as untaxed income on Worksheet B of the FAFSA. It should also be included in the earned income figures reported on the FAFSA.
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Why do you need combat pay?
According to Military.com, members of the Armed Services qualify for combat pay if they are subject to or wounded by hostile fire or explosive mines, or on duty on foreign soil and subject to the threat of physical harm or imminent danger due to civil unrest, civil war, terrorism, or wartime conditions.
Combat pay is a bonus paid to military service personnel who are serving in regions that are designated hazard zones. The additional pay is generally not subject to federal income tax although Social Security and Medicare taxes are deducted.
Combat pay is like a means for the government to recognize the struggles, pain, and trauma the armed forces personnel go through in fighting in hazardous areas and reward them accordingly.
How much is combat pay?
Combat pay is generally not counted as federal taxable income. However, the recipient must still pay Social Security and Medicare taxes on the extra pay. States set their own rules for taxing combat pay. The U.S. Department of Defense can also designate certain combat zones as excluded from the tax break.
As of 2021, combat pay is $225 a month, on top of a basic pay rate that varies widely. Basic pay is based on military rank and years of service. However, each state has the amount it pays as combat pay for its armed forces personnel.
What countries does combat pay apply for?
The United States is not actively engaged in actual combat in all of the countries on the combat zone list. The list also includes combat support areas and contingency operations areas.
These are countries where in the event of war, as military personnel, you can be sure to get your combat pay monthly. Countries and areas designated as combat zones are-
- The Philippines
- The Sinai Peninsula
- The Kosovo area
- The Arabian Peninsula area.
- The Federal Republic of Yugoslavia
- The Adriatic Sea
- The Persian Gulf
- The Red Sea
- The entire land area encompassing Iraq, Kuwait, Saudi Arabia, Oman, Bahrain, Qatar, and the United Arab Emirates. In addition, there are also bodies of water, considered as military combat zones where military personnel should expect to get combat pay. The few of them are-
- 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 Adriatic Sea
- The Ionian Sea north of the 39th parallel
How does combat pay work?
Combat pay works differently in every state. However, you do not have to report income received during service in a combat zone as gross income. For any month you served in a combat zone, you don’t have to report these types of income:
- Active duty pay
- Imminent-danger pay and hostile-fire pay
- Reenlistment bonus
- Pay for accrued, unused leave, as determined by the Department of Defense
- Pay for duties as a member of the armed forces in clubs, messes, post and station theaters, other non-appropriated fund activities
- Awards for suggestions, inventions, or scientific achievements. This applies if you made your submission in a month you served in a combat zone.
- Student loan repayments if you served in a combat zone in the year of service required to earn the repayment
For Commissioned Officer
If you are a commissioned officer, the combat pay exclusion for any month is limited to the total of:
- The highest rate of enlisted pay
- Hostile-fire pay
- Imminent-danger pay
This limit doesn’t apply to commissioned warrant officers.
You would not be required to claim an exclusion for combat pay on your return. The excludable amount shouldn’t be in your W-2, Box 1 wages.
If an excludable amount is in your Box 1 wages, you should get a corrected W-2. Nontaxable combat pay will usually be shown on your W-2, Box 12 with code Q.
If you served in a combat zone for one or more days in a particular month, you are allowed the above exclusions for that entire month. Combat zone service includes periods when you are-
- Absent from duty due to illness, wounds, or leave
- A prisoner of war or missing in action, if that status is kept for military-pay purposes
- In some cases, you can also exclude military pay earned while hospitalized after leaving a combat zone. Your hospitalization must be due to a wound, disease, or injury incurred while you were serving in a combat zone.
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Combat zone considerations
For tax purposes, military service outside a combat zone is treated the same as inside a combat zone if both of these apply:
- The Department of Defense determines the service is in direct support of combat zone military operations.
- The service qualifies you for special military pay for duty subject to hostile fire or imminent danger.
- You are not considered to be in a combat zone if any of these apply:
- You are in a combat zone during leave from a duty station located outside the combat zone.
- Also, you pass over or through a combat zone during a trip between two points outside a combat zone.
- You are in a combat zone only for your convenience.
Combat pay differs from base pay because it is the compensation given as a bonus to those in hazardous zones. Not all those who are serving in the U.S. Armed Service are receiving combat pay, but all those who are receiving combat pay are employed by the U.S. Armed Service.
Over the years, it has served as a good consideration for good service. Even though the amount of money is not, the fact that it is being paid at all is a good way to appreciate the military.
Frequently asked questions
Yes. Combat pay is only for the military. It includes all military pay including wages earned as well as any reenlistment or other bonuses, etc.
To get combat pay, you must be a member of the United States Armed Forces.
Entitlement to the compensation must have fully accrued in a month during which the member served in a designated combat zone or was hospitalized as a result of wounds, disease, or injury incurred while serving in a designated combat zone.
Not really. This is strictly on a choice basis. For enlisted persons and warrant officers, combat pay is nontaxable, and you should report zero for combat pay or special combat pay.
This type of pay is given to soldiers who are put in harm’s way, including if they were wounded in combat or were subject to hostile fire, mines, or other dangerous conditions. In 2021, combat pay came to $225, which would be added on top of a person’s base pay.
The combat pay is not taxable, but it’s shown on W-2, here in box 12, with Code Q. I will enter that into the system with the rest of the W-2 information because combat pay can increase some tax credits.
No. Even though the combat pay is compiled from tax payer’s money, you cannot say it’s your parents that pay the combat pay money. Combat pay is entirely nontaxable, and your parents should report zero for combat pay or special combat pay.
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