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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:

  1. From within your TaxACT return (Online or Desktop) click on the Federal Q&A tab
  2. Click to expand the Wages and Salaries topic, and then click Wage income reported on Form W-2
  3. Click Add to create a new copy of the form or click Review to review a form already created
  4. Proceed through the interview questions to enter information for Box 12.

After entering the amounts on the W-2, you must indicate the combat zone. Click the Federal Q&A tab, then expand Miscellaneous Topics and select Combat Zone. On the screen titled 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.

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