DanielV01
Expert Alumni

After you file

It depends.  When you are active-duty overseas, your military income is considered US income.  It is not taxed in another country, and you are not considered to be residing in another country.  For tax purposes you are considered to have lived in the United States the entire year (and not just 8 months).

However, if any of your pay from being deployed overseas is combat pay, that can affect your return in a positive way.  Combat pay (which is identified in box 12 of a W2 with a code of Q) is not taxable on your return.  However, if you have children, combat pay is used to get a maximum Additional Child Tax Credit for any children you may be claiming.  Plus, if either with or without the combat pay included in your income you qualify for Earned Income Credit, you can choose whether or not to include your combat pay for the greatest amount of Earned Income Credit and a maximum tax refund.

Otherwise, for the Federal Return, you being stationed overseas doesn't have other effects on your return.  If your State of Record taxes active duty pay, you would need to investigate to see if they give a special treatment to overseas active duty pay or not.  

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