While active duty service members can claim a higher number of tax exemptions than their Guard and Reserve counterparts, there are a few tax benefits specifically for members of the National Guard and Reserves.
If you are called to perform your reserve duties more than 100 miles away from home, you can deduct any unreimbursed travel expenses.
Because reservists are generally prohibited from wearing certain uniforms when off duty, you can usually deduct the cost to buy and maintain those uniforms. However, you must then reduce your expenses by the amount of any uniform allowance or reimbursement you receive so that you are not claiming the money twice.
Waived Tax Penalties
Many reservists face financial difficulties when called to active duty because their military pay is substantially lower than their civilian income. To get by, some will take money from an IRA, 401(k) or other retirement plan. The IRS normally penalizes the early withdrawal with a 10% tax if the distribution was made before age 59 ½. The IRS will waive this 10% tax, but you will be required to pay income tax on the money received.