Question

Combat pay __________. (Check all that apply.) A. Is reported on Form W-2, box 12a, Code...

Combat pay __________. (Check all that apply.)
A. Is reported on Form W-2, box 12a, Code Q
B. Can be used to calculate the child tax credit
C. Can be used to calculate the earned income credit
D. Is taxable income
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Answer #1

Solution:

Combat pay is given to the person joined in US military service, who performs duty in hazardous area. This is generally non taxable income so option D is incorrect

Box 12 code Q is used for combat pay so option A is correct

Combat pay is non taxable so it does not used for earned income credit so initially it is not included in earned income credit but in special cases IRS allows to choose it to include in the earned income credit so option C is correct

Combat pay is used for child tax credit so option B is correct

So correct option are A, B and C

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