The Fort Irwin Tax Center opens Jan. 24, 2017, and in preparation, we want to provide you with information about one of the unique tax benefits available to you as a Soldier.  California Revenue and Tax Code Section 17140.5 provides a benefit to active-duty Soldiers who are assigned to Fort Irwin but who maintain a domicile (the place where your permanent home is located or where you intend to return) in another state.  Soldiers domiciled outside of California may exclude their military pay from income when computing the state tax rate on nonmilitary income.  That’s right – your military pay is exempt from California tax and excluded from adjusted gross income from all sources.

This unique benefit can have a substantial impact on your taxes.  Not only will it reduce your taxable income but it may also qualify you for other credits or deductions.  For example:

SFC Snuffy is married, with a combined income of approximately $120,000. SFC Snuffy and his wife both work and pay approximately $9,000 in child care costs in California. Because their combined income is more than $100,000, they would not qualify for the California Child and Dependent Care Credit.  However, if SFC uses the Military Pay Adjustment to subtract his military from their gross income, their adjusted gross income is only approximately $69,000 and falls below the threshold to qualify for the tax credit. 

If you are interested in this credit and would like more information, contact The Fort Irwin Tax Center at 760-380-3604.  If you have made other arrangements for tax preparation this year, please inform your preparer that you may qualify for a military pay adjustment.