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Nontaxable combat pay is generally reported on Form W-2 in Box 12 with code Q. In TaxACT, the data can be entered on the W-2, in Box 12, or in the Q&A for Wages.
If using the Q&A for Wages:
After entering the amounts on the W-2, you must indicate the combat zone. Click on Q&A or Site Map, select Miscellaneous Topics, Combat Zone, and proceed to the interview screen 'E-filing Military Service.' Select the area served for the current tax year. This data will then transfer to the Electronic Filing Worksheet, and will allow electronic filing, if the withholding is greater than 50% of the wages.
