First you must understand just what is your Gross Income and what can be excluded, or not counted. Not all the money you receive is taxable. These exclusions generally include: living allowances, moving allowances, travel allowances, combat zone pay, and death allowances.
If you are serving in a designated combat zone, then you can exclude certain pay from your income. The month for which you receive this pay must be a month in which you either served in a combat zone or were hospitalized as a result of wounds, disease, or injury obtained while serving in the combat zone. You need only serve for one or more days in a month to qualify for exclusion for the entire month. A few examples of pay types eligible for exclusion include:
- Active duty pay earned in any month you served in a combat zone
- Imminent danger/hostile fire pay
- A reenlistment bonus if this extension occurs in a month you served in a combat zone
- Pay for accrued leave earned in any month you served in a combat zone
- Portion of any student loan repayment made for the year while serving in a combat zone
If you are on active duty and you move because of a permanent change of station, then you are entitled to a deduction for reasonable un-reimbursed moving expenses related to travel and the cost of moving household goods and personal effects.
You are able to deduct un-reimbursed work-related travel expenses when you are traveling away from your permanent duty station. You cannot deduct expenses related to travel overseas when you are stationed there, or when you are traveling for personal reasons. You are considered away from home when you are away from your permanent duty station for longer than an ordinary day’s work and you need sleep or food. Eligible expenses include business-related meals, lodging, laundry, and business phone calls.
If you are a member of a reserve component of the Armed Forces that must travel more than 100 miles away from home in connection with your service, then you can deduct your travel expenses as an adjustment to income.
The costs of traveling from one workplace to another, attending a business meeting away from your regular workplace, or traveling away from home overnight can be deducted from your income. However, the expenses of commuting to your regular place of work are not deductible.
Uniform expenses are not deductible, except when regulations prohibit you from wearing uniforms off duty. In this case, you can then deduct the un-reimbursed cost and expense of upkeep of the uniforms.
You can deduct dues paid to any professional society that is directly related to your military position (ex. engineering society), but you cannot deduct dues paid to an officers’ club or a noncommissioned officers’ club.
You can deduct the cost of work-related education if it is required by your employer or the law to maintain your salary, status or job or if it maintains or improves skills needed in your present work.