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What is a nontaxtable combat pay election?

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What is a nontaxtable combat pay election?

Normally, you might not want to include your combat pay as taxable income, because this would increase the amount of tax you owe.

However, when it comes to determining the amount of Earned Income Tax Credit (EITC or EIC), sometimes declaring the combat pay as taxable actually increases the EIC more then the additional amount of taxes, to the taxpayer's benefit.

You would run the return both ways (yes or no to the election), to see which gives a better result for you.

Read this article for a description of the situation -