Military Income and LIHTC

Written by Melissa Zera, Spectrum Enterprises

Obtaining income verifications can be sometimes difficult when trying to calculate income for military personnel.  Pay can be verified using the Leave and Earnings Statement and researching the current published Basic Pay.  Here are some tips.

1. The LES (Leave and Earnings Statement)

The LES for any military personnel can be obtained online through by logging onto https://mypay.dfas.mil/mypay.aspx.  There they can print their most recent paystubs aka LES.

The LES identifies rank (grade), years in service, whether or not there are dependents, direct deposit accounts, Thrift Savings Plan (TSP) deductions and pay.  Pay for full time service members is semi-monthly based on the amounts listed under Entitlements, half each pay.

The exhibit above shows an E5 enlisted soldier with four (4) years of service earning $2,247.30 in monthly pay ($1164.47 mid-month and $1,163 end of month distributions).  He receives monthly BAS ($294.43) and BAH ($1,1725), has a dependent, TSP deductions and direct deposit.  All countable income and assets for LIHTC.

2. Basic Pay Chart

Basic pay is determined by rank and length of service and is set in law by Congress in a pay table.  Visit www.militarytimes.com/money and click on “Pay Charts” to access this information.

3. (BAH) Basic Allowance for Housing

BAH is a non taxable government issued monthly housing allotment to theoretically cover 100% of average rental costs in every location.  To determine BAH visit www.militarytimes.com/money and click on “BAH Calculator”.

BAH is countable income for LIHTC.  The Housing and Economic Recovery Act of 2008 (HERA) introduced an exception to this rule.  If the military employee is housed in building located in a county with a military base that has had its population grow by 20% or more between 12/31/2005 and 6/1/2008 or any country adjacent to such a county, BAH is excluded from their income.  This exception only needs to be considered when your properties are near a military base.

Qualifying military bases are identified in Notice 2008-79.25 The list is not meant to be exclusive and any qualified military installation which satisfies the percentage requirements of IRC §142(d)(2)(B)(iii)(1) would be eligible to receive similar treatment regardless of its failure to be included in Notice 2008-79 or any subsequent updates.

1. Colorado – U.S. Air Force Academy

2. Hawaii – Fort Shafter

3. Kansas – Fort Riley

4. Maryland – Annapolis Naval Station (including U.S. Naval Academy)

5. South Carolina – Fort Jackson

6. Texas – Fort Jackson and Fort Hood

7. Virginia – Dam Neck Training Center Atlantic

8. Washington – Naval Station Bremerton

4. BAS (Basic Allowing for Subsistence)

BAS is non-taxable monthly allowance to defray a portion of the costs for food.  BAS is countable income.

5. TSP  (Thrift Savings Plan)

The federal Thrift Savings Plan allows participants to place a portion of their monthly pay (pre-tax) into an account similar to a private-sector 401(k) investment plant.  TSP investments should be verified like other 401(k) accounts.  Participating members can go to https://www.tsp.gov/index.shtml to print out their latest statements.  TSP mails quarterly and an annual summary statement in February.

6. Drill Pay

Members of the National Guard or Reserves perform 12 weekend drills and 14 days of annual training each year.  Monthly and annual pay can be found at www.militarytimes.com/money/pay_charts and clicking on either Drill pay or A year in the Guard or A year in the Reserves.  Clarification should be obtained regarding training pay.  Unlike active duty, most reserve personnel are paid once a month unless they are working more than their scheduled monthly weekend and annual training.  Many members receive food and housing allowances during their two-week stint which is countable income.

7. Hostile Fire Pay (HFP)

Hostile Fire also referred to once as Combat Pay.  This is incentive pay for duty under hostile file to a military person assigned or deployed to a combat zone.  The amount of pay is not prorated and is currently $225 per month.  This income is exempt.

8. Imminent Danger Pay (IDP)

This is different from Hostile Fire pay.  It is paid at the rate of $7.50 per day with a maximum monthly pay of $225.  IDP is countable income.  Service men are either entitled to HFP or IDP, never both.

9. Hazardous Duty Incentive Pay (HDIP)

HDIP is paid to service members for hazardous duty that is generally not in a war zone.  It includes duty on flight lines, test aircraft, etc.  Like HFP it is paid monthly and not prorated.  This income is countable.

10. Income and Deployment

The 4350.3 reads:  Income from the head of household, spouse or co-head must be counted even if they are deployed.  All other household members who are deployed must be removed from the household while deployed, and his/her income must not be counted.  However if the spouse or dependent of the person on active military duty resides in the unit then that person’s income must be counted in full even if the military member is not the head or spouse of the head of the family.  Example:  John and Mary’s son Lieutenant Bob is away in Afghanistan.  Bob’s wife Susan resides with John and Mary.  Bob’s income is therefore counted, however Bob is not considered a household member.

Tags:


Subscribe to Our Blog

 

 Subscribe in a reader