3003-5 Military Pay

3003-5 MILITARY PAY

Members of the military receive their wages through the LES Leave and Earning Statement . 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 D for a detailed list of LES Leave and Earning 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 military person's location,

The military person's deployment status, and

Program policy.

Please see MS 3002-1 of this manual for more information about household composition.

3003-5 A. Resources

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

1. Joint bank account.

If the military person is deployed, any monies deposited into a joint bank account and accessible to the household will count as unearned income to the household in the month received and as a resource the following month. However, the amount of money from a joint account used by a deployed individual is not countable income to the family.

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 Earning Statement . Lump sums are countable in the month they received.

3. Vehicles.

There is no special treatment for the vehicles of military families.

4. The Thrift Savings Plan ( TSP Thrift Savings Plan ).

This is a form of a government employee retirement plan and is an excluded resource as long as the employee does not withdraw the funds.

5. Savings bonds.

The cash in value of a savings bond is a countable resource once the funds can be accessed.

3003-5 B. Income

A military person's income is treated differently if the military person is living with the household or if the person is deployed.

Note: The income on the LES Leave and Earning Statement is considered as monthly income, even when the military person receives a mid-month check.

1. Earned Income

a. Countable Income

If the military person is living in the home, payments and allowances shown in the Entitlements section of the LES Leave and Earning Statement will be considered earned income and counted in the budget. The most common of these are base pay, or basic pay, basic allowance for subsistence ( BAS Basic Allowance for Subsistence ), a military person's food allowance, and basic allowance for housing ( BAH Basic Allowance for Housing ).

If the allowance is listed in the Entitlements section and is also listed in the Deductions or Allotments section of the LES Leave and Earning Statement , count only the amount above the Deductions or Allotments amount as earned income in the budget.

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

Households living on base: exempt as 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: exempt vendor payment.

Note: BAS Basic Allowance for Subsistence is counted as income to the family. Families that live on base are allowed this income and while BAH Basic Allowance for Housing is excluded because it is paid directly to the vendor, BAS Basic Allowance for Subsistence is paid in cash to the family for food items.

2. Bonuses are paid to a military person will appear in the Entitlements section of the LES Leave and Earning Statement . 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 received. If the bonus is paid in installments, it counts as earned income in the month received.

Example: Doug and his family move to a new off-base location. He receives his monthly rent on his LES Leave and Earning 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 earned income and rent of $1300 is allowed as a shelter deduction.

b. Excluded Income

Exclude the amount of the Clothing Maintenance Allowance ( CMA Clothing Maintenance Allowance ) used to purchase clothing as a reimbursement.

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

The portion of a military retirement payment which goes to an ex-spouse under a divorce decree property settlement is not counted as income to the retiree.

Example: William receives his LES Leave and Earning 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 exempt income.

2. Unearned Income

a. Deposit to a Joint Account

The amount that a deployed military person deposits to a joint account will be counted as unearned income to the household. Any amount spent by the deployed member is not available to the household so is not counted as income.

Example: Bill is in the military and receives $1000 per month in wages. Bill's wife Virginia and their daughter Anna have an open case. Bill has his military pay deposited into a bank account in his name only; Virginia has no access to the funds or to the account. Do not count any of Bill's income in the eligibility determination for Virginia and Anna.

Example: Joe is in the military. His paycheck is $1000 a month. He deposits $500 into his account and $500 into a joint account with his wife, Andrea. The $500 deposited into the joint account is budgeted as unearned income to the household. Since Andrea does not have access to Joe's account, only the amount deposited in their joint account counts.

Example: Ralph is in the military making $1200 a month. An allotment check of $1000 is paid directly to his wife Karla and $200 to himself. The money sent to Karla counts as unearned income.

Example: Bill is in the military making $1500 a month. He deposits the entire amount into a joint account with his wife, Joy. Bill uses his debit card to access monies from this account for his personal use. The money that Bill withdraws is not accessible to Joy, so it does not count as income.

b. Combat Pay

Combat pay is exempt when determining eligibility. 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 Systematic Alien Verification for Entitlements 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: https://www.irs.gov/newsroom/combat-zones .

c. Budgeting Combat Pay

If the military person was in the household before deployment, the amount of their military pay 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 provided before deployment, the amount provided is countable unearned income.

If the amount provided to the household is more than the amount provided before 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 $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 unearned income because that's the amount she was receiving before Mike was deployed to a combat zone.

3. Deductions

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 Leave and Earning Statement .

a. Housing Allowances ( BAQ Basic Allowance for Quarters or BAH Basic Allowance for Housing ):

Households living on base whose housing is paid as in-kind income: no deductions are allowed for expenses paid by in-kind income.

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: no shelter deductions are allowed for expenses paid via a vendor payment.

b. 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 by a court order or through CSED Child Support Enforcement Division .

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