An actual TAX question

[❤ mollymouser ❤]

This is probably a silly question.
Or a weird question.
Oh well.

My wonderful DH is active duty military. I will get his 2010 W-2 form in January (which I need to file for fed and state income taxes.)

BUT .... He's deployed in Iraq right now, and was deployed in all of December.

And the way that the CZTE (combat zone tax exclusion works) is that FIRST they take out his normal taxes, and then at some mysterious point of time in the future ... they give SOME of them back.

So .... his W-2 will show that he paid X amount in taxes for 2010, but come January-February or so, they will be giving back around $1500 of those taxes.

Will this totally screw up our 2010 taxes, or will it just work itself out the following year?

Note: The pay people and everyone else at his Air National Guard base are completely clueless, so there's no one to ask about this. We get our taxes done by a CPA every year, is this one of those "go ask your CPA-type questions?"

[formerexpat]

Molly, you may need to ask this over on the other MSN Money for more air play.

I'm afraid I don't have experience with CZTE and how they withhold. Has his check been the same amount now as when he was here in the states? If so, then I'd say yes it appears that they withhold at the normal amount.

Thanks to your husband for his service and to you for the sacrifices you make as a military family.

[qofcc]

Yes, it will work itself out the following year. You'll pay taxes based on the W-2. Any money they give him in 2011 will be in the W-2 in 2012, and so on. It's no different than when a sales person get a bonus in 2011 for work they did in 2010. The government doesn't care that you received the money for something that happened in a previous year, taxes are owed in the year in which you received it.

[❤ mollymouser ❤]

That's what I was thinking ... it will work itself out. I will, of course, check with our CPA. And the amount in question won't change our tax bracket or anything like that.

[robbase]

First of all, since your husband is deployed you do NOT have to file by 15 April, you get an extensions since your husband is deployed, so no rush to do your taxes.

Since your near by NG is clue less, your husband should work the issue with the military finance office in Iraq (yes there are quite a few military finance offices in Iraq). They should be VERY familiar with thsi type of situation and what the remedy is

[robbase]

Also if your husband is AD that is not how CZTE works...maybe the first month because they missed an input or something....but once his CZTE is input into the pay system he will pay no (zero) federal taxes (unless he makes more base pay than the highest ranking enlisted person in the military- the Command Sergeant Major of the Army--and even then he only pays tax on the amount above this)

[The Virginian]

I agree, Only worry about whats on the actual w-2 form. Any adjustments will show up in the following year.

[❤ mollymouser ❤]

Robbase ... my wonderful DH is an officer and makes more in base pay than the highest ranked enlisted ~ so only a portion of his base pay is non-taxable when he's in a designated combat zone (like Iraq).

According to our local pay people, it's "possible" that for my wonderful DH's next paycheck (LES) on Dec 31, they "may" have corrected the problem of adjusting his taxes/withholding ... which was not correct as of his DEC 15 LES. If they've made the correction, his W-2 should be correct.

So, we'll wait and see.

[robbase]

Just because someone is an officer does not mean he makes more than CSMA, usually it is like LTC or higher that has to actually pay some tax in a combat zone

[❤ mollymouser ❤]

He's a Lieutenant Colonel.

[bobosensei]

I was checking my DH's LES today and I thought of you Molly. Did they get it right?

[TD2K]

Paging commentator

[❤ mollymouser ❤]

They fixed his pay and his Dec 30 LES is correct ... which means that his W-2 will be correct! WOOO HOOO!

[moon/Laura]

hey molly.. now that we have a tax board, in part at commentator's request, I will move this there.

[❤ mollymouser ❤]

Cool beans!

[TheOtherMe]

Dec 24, 2010 17:23:42 GMT -5 ❤ mollymouser ❤ said:

They fixed his pay and his Dec 30 LES is correct ... which means that his W-2 will be correct! WOOO HOOO!

Glad that all worked out for you, Molly.

[commentator]

Unfortunately, I have little experience dealing with active duty military tax returns. I'm glad it appears that Molly's DH will be getting an accurate W-2.