Military tax breaks

Q: Are there any tax breaks for military folks?

B.T., Salem, Ore. A: There sure are. For example, any combat pay earned might not count as taxable income — though you can count it when calculating your Earned Income Tax Credit (EITC), which can shrink your tax bill. Enlisted members, warrant officers or commissioned warrant officers can often exclude other items from taxation; these may include accrued leave pay and repayments on student loans.

Moreover, those in the military either live on base or use a housing allowance that isn’t taxable. Those receiving a monthly “basic allowance for subsistence” (covering meals) get to use it tax-free. Military reserve members may qualify to take early, penalty-free withdrawals from IRA and 401(k) accounts. And those serving in combat zones get an automatic 180-day extension for filing their tax returns, paying their taxes and filing refund claims.

This isn’t formal tax advice, so consult a tax professional for guidance on your personal situation. Learn more in IRS Publication 3 (the Armed Forces’ Tax Guide) at IRS.gov.

Q: What does it mean when a company might be “taken private”?

R.G., Five Forks, S.C. A: When companies first sell shares of themselves to the public, they typically do so via an initial public offering (IPO). Once public, they’re subject to many regulatory requirements, such as filing regular earnings reports.

But they can revert to being not public, with their shares no longer trading on the public market. That can happen in a variety of ways, including a merger with a private company, or having all the shares bought by a private equity firm; that’s being “taken private.” Companies that have been taken private include the company formerly known as Twitter (now X) and Panera.