Military Tax Free Leave

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Military Tax Free Leave

Postby Dodger » Sun Oct 09, 2011 5:03 am

I have a question for anyone who has taken tax free leave after returning from a deployment. I took some tax free leave last month. The leave was charged on my LES and it was clearly marked as tax free, but my taxable income for the month was unaffected. Does the tax free portion just show up on W-2 at the end of the year?

Some of the guys in my unit received a federal income tax credit on the "entitlement" portion of their LES. People of the same rank and time in service got different amounts though. I've searched through the regulations and can't find anything specific.
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Postby Navy Chop » Sun Oct 09, 2011 5:53 am

It appears as tax refund under the deductions on the LES. It won't show if you took it on a month that is already tax free. The leave to be tax free must be taken in a month outside the exclusion zone.
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Postby MCM 2008 » Sun Oct 09, 2011 9:12 am

If memory serves me correctly, I think you can only take tax-free exclusion zone leave the first time you take leave after re-deployment.

Even if you did not consume all of your tax-free leave on your first leave period after re-deployment, the tax-free nature is forfeited for all subsequent leave.

For example, let's say you earn 20 days of tax-free leave. After re-deployment, you go on block leave for 10 days. That's tax-free. A couple of months later, you go on leave again for 10 days. That second period of leave doesn't count as tax-free leaves, and instead reverts to normal leave.

At least, this is how I recall the finance office explaining it to me. I haven't researched the statute.

This might account for the differences you saw among different people of the same rank.
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Postby Dodger » Sun Oct 09, 2011 6:19 pm

What boggles my mind about this is the lack of knowledge from finance themselves. I e-mailed DFAS and they said to call them. When I called them, they told me to go to my local finance office. When I went to my local finance office, even the civilian manager in charge could not explain it to me. I can't understand why nobody can point to a regulation.

I would think it would work just like combat pay where they just wouldn't include those days in your taxable income. If they gave you a refund in the month you were charged the leave, how would they know how much to give you? They wouldn't be able to tell until the end of the year when you filed your taxes.
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Postby Navy Chop » Mon Oct 10, 2011 7:26 am

They only refund the taxes for the dates you took tax free leave. For example you pay $300 dollars a months in fed taxes. You took ten days tax free leave, solessee refund in the les for $100 should have been included.
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