Why might a military taxpayer want to consider making contributions to the military Thrift Savings Plan while deployed to a combat zone? Nontaxable combat pay is:

Not included in adjusted gross income (AGI) for purposes of determining the Saver’s Credit. Therefore, the contributions to the military Thrift Savings Plan may increase the tax benefits of saving for retirement.

Not included in AGI for purposes of determining taxability of current contributions to the military Thrift Savings Plan. Therefore, the taxpayer can pay tax on their current contributions at a lower rate.

A good source of funds to help the taxpayer increase their tax basis in the military Thrift Savings Plan account.

Subject to FICA taxes, and contributions to the military Thrift Savings Plan can defer FICA tax on at least some of the combat pay.

Answer rating: 100% (QA)

The correct answer is d Subject to FICA taxes and contributions to the military Thrift Savings Plan ... View the full answer