On March 20, 2008, the Internal Revenue Service issued a release which advises U.S. military taxpayers, serving in a designated combat zone, that their nontaxable combat duty pay will qualify as income for purposes of eligibility for the tax rebate payable under the Economic Stimulus Act of 2008. The tax rebate is available in either 2008 or 2009.
Service members who would not otherwise file a federal income return, as a result of their nontaxable combat zone income, must now file Form 1040A, U.S. Individual Income Tax Return, with the IRS by October 15 in order to receive the economic stimulus payment in 2008.
To receive the rebate, the service member must:
(i) show at least $3,000 in qualifying income (earned income, combat zone pay, Social Security benefits or Veterans Affairs benefits) on their tax return;
(ii) file their 2007 federal income tax return on or before Oct. 15, 2008 (a service members federal income tax filing deadline is extended by 180 days after leaving a combat zone) to receive the tax rebate in 2008; and
(iii) file Form 1040A with the IRS (report the nontaxable combat duty pay on Line 40b of Form 1040A).