460-7      SPECIAL RULES FOR A SPOUSE IN THE MILITARY

Members of the military receive their wages through the Leave and Earnings Statement (LES).   This statement reflects a military person’s monthly payments and allowances, tax deductions, and other allotments that are deducted from their gross pay.  See Addendum 2 for a detailed list of LES Leave and Earnings Statement Entitlement, Deduction and Allotment definitions and instructions on how to count each in the military household’s benefit determination.

How the resources, income, and deductions of military personnel affect the household’s benefits depends on the program policy.  

See APA MS 460-1G for the definition of a deployed spouse.

A.  Resources

Types of resources typical to a military person’s household are as follows:

1. Joint bank account.  Any deposits made by the deployed military person will count as income to the household in the month received and as a resource the following month.  See APA MS 441-2P and 431-2A.

2. Vehicles.  There is no special treatment for the vehicles of military spouses.  See APA MS 432-2A.

3. The Thrift Savings Plan (TSP).   This is a form of a government employee retirement plan and is an excluded resource. See APA MS 431-2G.

4. Savings bonds.  The cash in value of a savings bond is a countable resource once the funds can be accessed.  See APA MS 431-2D.

B.  Income

Types of income typical to a military person’s household are as follows:

1. Countable Income

Payments and allowances shown in the Entitlements section of the LES Leave and Earnings Statement will be considered income.  The most common of these are base pay, or basic pay, basic allowance for subsistence (BAS), a military person’s food allowance, and basic allowance for housing (BAH).

1. 1.   Housing and food allowance (BAS Basic Allowance for Subsistence., BAQ Basic Allowance for Quarters or BAH Basic Allowance for Housing):

1. 1. •         Households living on base:  exempt income.

      • Households living off base who receive the allowance directly:  counts as earned income.

      • Households living on or off base whose housing expenses are paid directly to the vendor:  exempt income.

Example:

Doug and his wife move to a new off-base location. He receives his monthly rent on his LES Leave and Earnings Statement.  His BAH Basic Allowance for Housing allotment in the entitlement column is $1500. Doug’s landlord verifies that his monthly rent is $1300.  The $1500 BAH Basic Allowance for Housing is countable income.

1. 2.    Bonuses for reenlistment and special pay for warfare.  Bonuses paid to a military person will appear in the Entitlements section of the LES Leave and Earnings Statement.  Bonuses count as income in the month of receipt.

1. 3.    Clothing Maintenance Allowance (CMA)

1. 1. •        A cash payment to purchase clothing is countable earned income.  This income is exempt if the amount is a refund or reimbursement.

Example:

William receives his LES Leave and Earnings Statement and it shows a CMA Clothing Maintenance Allowance of $125 in the entitlement column.  In the deduction column, the CMA Clothing Maintenance Allowance is listed as $100.  Even though William did not spend the entire amount of the clothing allowance the entire $125 is countable income.

2. Excluded Income

1. •    Clothing Maintenance Allowance (CMA) is excluded when received as a refund. See APA MS 440-3D.

1. •    Dislocation Allowance (DLA) or any other allowance which are one-time payments, will only count as income if the allowance can be anticipated.

1. •    Military retirement pay that goes to an ex-spouse under a divorce decree property settlement is not counted as income to the retiree. See APA MS 460-6(A)(2).

1. •    Combat Pay (hostile fire and imminent danger payment)

Combat pay is excluded as income.  Disregard any amount of combat pay that goes to the household in excess of the military person’s pre-deployment earnings. Combat pay will be listed in the Entitlements column, and may appear as follows:

1. •     Combat pay

   • Hostile fire pay                                                                                                                                                         

   • Imminent danger pay

   • Incentive pay for hazardous duty

   • SAVE

   • Hardship duty pay-Location

   • Hardship duty pay-Mission

   • Hardship duty pay-Involuntary Extension

Note:

Combat zones are designated by an Executive Order from the President as areas in which the U.S. Armed Forces are engaging or have engaged in combat.  For combat pay to be excluded as income, the military person must be deployed to one of the combat zones listed at:  http://www.irs.gov/newsroom/article/0,,id=108331,00.html  

Budgeting Combat Pay

Once the military person is deployed to a combat zone:

1. •     If the amount provided to the household is equal to or less than the amount provided before deployment, the amount provided is countable income.

1. •     If the amount provided to the household is more than the amount provided before deployment, the additional amount is considered exempt combat pay.