I need to know about Tax-Free Zones for the Military....?

Question

I need to know how my taxes are going to be figured. I made money in the US for the first have of the year, around 20,000. Then I was stationed in Bahrain for the second part of the year, another 20,000. I understand that the last 20,000 is tax free what I don't understand is if the taxes on the first 20,000 will be taxed at the 20,000 dollar rate or the 40,000 dollar rate. A huge difference. Anyone had to figure there tax like this before? Can you help me?

Answer 1

The $20K you made in Bahrain is not taxable income.  Your W-2's will reflect the difference, and you will only be taxed on the $20K you made in the states.

Answer 2

open the pdf account.it ll helpfull.

Answer 3

My father used to work for the IRS and he told me, the money you made in the UNITED STATE OF AMERICA will be taxed, so 20,000 will be taxed not the 20,000 you made in Bahrain. Your W2'S will reflect only the money you made in the USA, so no worries, you will only be taxed once :) good luck and thank you for your service :)  

Answer 4

Bahrain is not necessarily a Tax Free zone.   but taxes are based ONLY on the taxable allowance.. so if only $20K of your income is taxable, then you will only pay taxes on $20K no matter how much money you earned.  

your W-2 will list exactly what part of your income was taxable and what wasn't.  Don't forget BAS. BAH,  COLA are also NON taxable income too.  

(Money earned while stationed OCONUS can be taxable.  Japan, Germany,Korea.. etc.  Only designated Combat Zones are tax free).  State Taxes are of cour e up to the individual state.. some will tax you even if you were not living there if you have an address there.

Answer 5

The $20k that you earned stateside will be taxable.

The $20k that you earn in a combat theater will not be taxable.

So in that case, the $20k that you earned that is taxable will be taxed at the $20k bracket [not the $40k bracket].

Also keep in mind that there are other areas of military service where your income is not taxable even when you are stateside. For example I served on subs, and my income was not taxable.

Answer 6

They will only tax the money you made in the United States of America.  

Answer 7

the only are that i am awared of being tax free zone is location near the war that support OIF. you will only pay taxes for the money you earn when you were not in a Taxemp zone. and some time all you need is to spend one minute in country to get the whole month free.