770-6 MILITARY PAY
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. Please see Addendum 4 for a detailed list of LES 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 military person's location,
The military person's deployment status, and
Program policy.
Please see ATAP MS 711-2 and 711-7 for more information about household composition.
Types of resources typical to a military person’s household are as follows:
Joint bank account. Any deposits made by the deployed military person, who remains a member of the household, will count as income to the household in the month that it is received and as a resource in the following month. Before determining the amount of the deposit that is available to the family, deduct any money regularly kept by the deployed member for their own use.
Bonuses for reenlistment and special pay for warfare. Bonuses paid to a military person will appear in the Entitlements section of the LES. If a bonus is received in a lump sum, it is exempt as income under the non-recurring lump sum provision but is counted as a resource in the month that it is received. If the bonus is paid in installments, it is counted as earned income in the month received.
Vehicles. There is no special treatment of vehicles for military families. See ATAP MS 752-10.
The Thrift Savings Plan (TSP). This is a form of government employee retirement plan and is an excluded resource as long as the employee does not withdraw the funds. See ATAP MS 754-7 B. for more information about pension plans.
Savings Bonds. The cash value of a savings bond is a countable resource once the funds can be accessed.
A military person’s income is not treated differently if the military person is living with the household or if the person is deployed.
Note on Budgeting
Military Pay:
The income on the LES
is considered as monthly income, even when the military person receives
a mid-month check. See ATAP
MS 756-1.
Countable Income
If the military person is a member of the assistance unit, payments and allowances shown in the Entitlements section of the LES 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).
If the allowance is listed in the Entitlements section and is also listed in the Deductions or Allotments section of the LES, count only the amount above the Deductions or Allotments amount as earned income in the budget.
Households living on base: exempt as earned in-kind 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: counts as earned income.
Bonuses will be paid directly to a military person will appear in the Entitlements section of the LES. If a bonus is paid in a lump sum, it is exempt as income under the lump sum provision but is counted as a resource in the month received. If the bonus is paid in installments, it is counted as earned income in the month it is received.
Example – Family
lives on base:
Joe and his family live on base. His LES
shows BAH of $800 in
the Entitlement column. The $800 BAH
is countable income and rent of $800 is allowed as a shelter deduction.
Example -Family
lives off base:
Doug and his family move to a new off-base location. He receives his monthly
rent on his LES. His
BAH allotment in the
entitlement column is $1500. Doug’s landlord verifies that his monthly
rent is $1300. The $1500 BAH
is countable earned income and rent of $1300 is allowed as a shelter deduction.
Excluded Income
Clothing Maintenance Allowance (CMA) used to purchase clothing is excluded as a reimbursement.
Dislocation Allowance (DLA) or any other allowance which are one-time payments, will only count as earned income if the allowance can be anticipated.
Military retirement pay that goes to an ex-spouse under a divorce decree property settlement is not counted as income to the retiree.
Example:
William receives his LES
and it shows a Clothing Maintenance Allowance (CMA) of $125 in the entitlement
column. In the deduction column, the CMA is listed as $100. Even
though William did not spend the entire amount of the clothing allowance
the entire $125 is exempt income.
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:
Combat pay
Hostile fire Pay
SAVE pay
Imminent danger pay
Incentive pay for hazardous duty
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
If the military person was in the household before deployment, the amount of their military pay that is available to the family after deployment is countable earned income.
If the military person was not in the household before deployment, the amount provided to the household before deployment is considered countable unearned income.
Once the military person is deployed to a combat zone:
If the amount provided to the household is equal to or less than the amount provide before the deployment, the amount provided is countable unearned income.
If the amount provided to the household is more than then amount provided before the deployment, the additional amount is considered exempt combat pay.
Example:
Mike is in the military stationed overseas. Mike’s wife Bonnie and
their daughter have an open case. Mike sends his wife $1000 every
month. When Mike is deployed to a combat zone his pay is increased
to $1300 a month, which is deposited into a joint account. The additional
$300 is considered combat pay and is exempt. The remaining $1000 is budgeted
as countable earned income because that’s the amount the family was receiving
before Mike was deployed to a combat zone.
There are certain allowable expenses that are specific to a military person’s pay. Listed below are allowable expenses that are located in the Deductions column of the LES.
Households living on base whose housing is paid as in-kind income: the value of shelter expenses paid by in-kind income are shelter expenses.
Households living off base whose housing allowance is received directly: shelter deductions paid by the household are allowed.
Households living on or off base whose housing expenses are paid directly to the vendor: shelter expenses are allowed for expenses paid via a vendor payment.
Support or Community Debt. This deduction is either a spousal or child support obligation. A deduction is allowed for the monthly child support obligation if verified.
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