The Working Families Tax Relief Act of 2004 and the Gulf Opportunity Zone Act of 2005 give military personnel the option of treating combat pay as earned income for purposes of the EIC.
If you and your spouse do choose to include your nontaxable pay as earned income for the EITC, you may owe less tax and get a larger refund. If you choose to include your combat pay, you must include all of it.
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