Question

Arthur, an Air Force major, received a permanent change of station transfer from Alabama to Spain. His spouse did not accompany him and, instead, moved from Alabama to her parents' home in California. If she received a $7,500 relocation allowance and was later reimbursed an additional $2,500, how much of the $10,000 moving allowance she received, if any, must she include in her income

Answer 1

Answer:

$0

Explanation:

Generally speaking, military housing allowances, subsistence allowances, overseas housing allowances and family separation allowances are not included in gross income. They are not taxed by the federal or state governments. Military personnel are not relocated based on the country's national security needs, not their own personal needs.

If the moving expenses exceed the amount given to them by the Air Force, the extra amount is generally tax deductible.