Transportation costs to reservist meetings generally are not deductible. A possible exception is the cost of traveling from your regular job location to a meeting held on a regular workday or traveling from home to a meeting outside the metropolitan area where you live and normally work. The cost would be deductible, subject to the 2% adjusted gross income (AGI) floor for miscellaneous itemized deductions (19.1).
If you travel overnight more than 100 miles away from your tax home (20.6) to a meeting or training camp, you may claim an above-the-line deduction (12.2) for transportation, lodging, and meals (subject to the 50% reduction for meals) attributable to those trips; see the Filing Tip in this section.
If you owed a tax deficiency to the IRS before being called to active duty, the IRS may defer payment, without interest, if your ability to pay has been severely impaired by your call-up (35.7). If you are not allowed a deferment, the IRS generally will reduce its interest charge to 6% on the taxes you owed before your call-up.
If you are called to active military duty for over 179 days, or indefinitely, distributions received during the active duty period are not subject to the 10% penalty for distributions before age 591/2. This applies to distributions from a traditional IRA and distributions attributable to elective deferrals you made to a 401(k) or 403(b) plan.
Furthermore, no tax (as well as no penalty) is due on a qualified reservist distribution if it is recontributed to a traditional IRA within two years after the end of the active duty period. Repayment must be made to a traditional IRA even if the distribution was from a 401(k) or 403(b) plan. The repayment should be reported on Form 8606 (Line 1) as a nondeductible contribution to the traditional IRA.
If you contribute to a health flexible spending arrangement (3.15), but before you can use up your HFSA balance to reimburse your medical expenses you are called to active military duty for over 179 days, or indefinitely, you can withdraw the funds and use them for any purpose if your employer allows “qualified reservist distributions” and you withdraw the balance by the regular plan deadline for receiving reimbursements. If your employer allows employees to obtain reimbursements of medical expenses within a 2½-month grace period after the end of the plan year (3.15), you have the same deadline to receive a distribution of your HFSA balance, but it does not have to be used to pay medical expenses.
The cost and upkeep of uniforms is deductible only if you are prohibited from wearing them when off duty; see 19.6. A deduction allowed under this test must be reduced by any uniform allowance you receive, and the unreimbursed cost is subject to the 2% adjusted gross income (AGI) floor for miscellaneous itemized deductions.
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