Rules Learned for Enrolled Agent Exam Allow Helping Taxpayers in Military
Military personnel encounter some special rules intended to ease their burden of filing tax returns. Therefore, professionals who complete an enrolled agent course are popular choices as tax advisers for individuals in the armed forces. An enrolled agent can not only prepare tax returns but also represent a taxpayer in matters with the IRS.
Military personnel can assign an enrolled agent to receive any tax notices and prepare responses. This is a valuable resource for someone with an overseas military assignment. Members of the armed forces who are stationed in combat zones are particularly ill equipped for responding to tax notices. The availability of an enrolled agent to act on behalf of a military taxpayer when necessary also alleviates forcing family to address any arising tax issue.
US military personnel are not exempt from having to pay all prior year tax liability by the normal April deadline. However, there is some paperwork relief for taxpayers in the armed forces. Plus, recent legislation provided a tax break for military personnel and their families who must sell their homes due to a reassignment of duty station. An enrolled agent is up to date on such tax advantages from completing annual EA continuing education.
The first tax rule applicable to armed forces personnel affects those stationed outside the US. They are granted an automatic extension of two months for filing an income tax return. This permits filing in June instead of April. The details covered in enrolled agent training explain that this is accomplished by writing “Taxpayer Abroad” at the top of Form 1040 and attaching a statement explaining the foreign location.
Military personnel who need more time to file a tax return can submit Form 4868 to extend the deadline to mid-October. Any extension past April 15 applies to filing tax return forms only and not payment of any tax balance due.
Tax rules are significantly different for armed forces personnel stationed in combat zones. Much of the compensation and reimbursements paid to someone stationed in a combat zone is exempt from federal income tax. The maximum exclusion for commissioned officers is the highest pay for enlisted individuals.
Assignment to a combat zone automatically provides more time for filing a tax return as well as paying any tax due. The basic extension period is 180 days. However, this becomes a longer extension depending upon when the combat zone post began. This calculation is learned when studying for the enrolled agent exam. Basically, when a taxpayer in the military is assigned to a combat zone after January 1, any days that remained to April 15 are added to the 180 days. The full 105 days from January 1 to April 15 are added for anyone already in a combat zone on the first of the year. This means there is a potential total extension of 285 days.
Deployment in a combat zone is difficult enough without having to take the correct steps for a combat zone tax extension. But these measures are important because they eliminate any tax penalties or interest imposed on late filing as well as late payment of taxes. An enrolled agent can easily perform the extension actions for a military taxpayer stationed overseas. The IRS provides a special email address for notification about deployment in a combat zone. When eventually filing a tax return, it should have “Combat Zone” displayed across the top of the form along with the overseas deployment date.
IRS Circular 230 Disclosure
Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.
