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.
Military Tax Free Leave
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.
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.
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.
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.