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Why is combat zone pay excluded?

Military personnel serving in designated war zones receive federal income tax exemptions from the IRS. These military tax exemptions apply to all military income earned during the months they spend in the theater, even if they are not in the theater for the entire month. This exclusion comes with some problems. While enlisted officers, warrant officers, and commissioned warrant officers are eligible, commissioned officers' exclusions are limited to the highest enlisted pay level and any additional imminent danger or hostile fire pay they receive.

What is refinancing?

Most people pay "points" when they refinance their mortgage. These points are interest prepaid, which means you pay them right away to get a lower interest rate during the repayment period. Fortunately, these points are deductible, and calculating how much to deduct is easy. 1 point equals 1% of the loan amount, so 1 point on a $100,000 loan equals $1,000. You may deduct the full $1,000—as long as you are able to enter the loan amount and the number of points paid, the online tax software you use will automatically calculate this amount. Points may also be referred to as discount points, maximum loan fees, loan discounts, or loan origination fees.

What household expenses can I not deduct?

You can't deduct insurance premiums or money used for loan principal unless you rent the property and generate income by incurring these expenses. The IRS also sets the mortgage interest deduction limit at $1 million for married couples and $500,000 for single filers. You can use multiple mortgages for primary, secondary and home improvement loans as long as the total does not exceed the mortgage interest deduction limit. You can also get an additional home equity loan interest deduction.