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 Federal (on smaller devices, click in the upper left-hand corner, then choose Federal), then expand Miscellaneous Topics and choose Combat Zone. On the screen titled E-filing - Military Service, choose 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.