PCS and Taxes: Deducting Military Moving Expenses

Man moving boxes

Service members who move due to a permanent-change-of-station move may be eligible to deduct some of their unreimbursed moving expenses from their federal income tax returns. Most moving costs are covered by military allowances, so you’ll want to save your receipts and log your expenses to calculate any possible deduction at the end of the tax year.

Check out IRS Publication 521, Moving Expenses for examples and more details.

Who is eligible?

The only people who can deduct moving expenses are active-duty military members who relocated due to PCS orders or, in some cases, their unaccompanied family members. These include orders to a first duty station and orders when separating or retiring from military service.

Free MilTax Services

MilTax’s tax preparation and e-filing software is available mid-January through mid-October. And MilTax consultants are available year-round to help with tax questions.

What expenses can be deducted?

In general, you can deduct unreimbursed expenses directly related to the moving and storage of your household goods, and your travel from your old location to the new one. This includes expenses for the taxpayer and any member of their household.

Qualifying military moving expenses fall into two groups:

Moving household goods and personal effects:

  • Packing materials
  • Shipping vehicles
  • The cost of moving your household goods, whether by car, container or contracted moving
  • Transporting pets

Reasonable travel and lodging expenses:

  • The cost of one night’s lodging at your old location if your furniture has been moved
  • The cost of the first night’s lodging in your new location
  • The costs of stopping and starting essential utilities
  • The cost of moving household goods from another location, up to the cost of moving them from your old location
  • In some cases, storage fees

To be a “reasonable” expense, the route you take, for example, must be the shortest, most direct route available from your previous home to your new one.

What expenses cannot be deducted?

The following items are not deductible:

  • Meals
  • Temporary lodging after the first night that you arrive at your new location
  • Vehicle registration
  • Driver’s licenses
  • Any cost of purchasing or renting a new home
  • Other expenses for stopovers, side trips or pre-move-house hunting expenses

How to report deductible expenses

Deductible moving expenses are reported on IRS Form 3903, and any deduction on that form is reported on your regular federal income tax return.

Reimbursements

Many moving expenses are fully or partially covered by military allowances. You cannot claim any expenses paid for by the military, whether paid directly or reimbursed. For example, you cannot deduct mileage and lodging that was reimbursed under the military’s Monetary Allowance in Lieu of Transportation, typically called mileage, or the PCS Per Diem rates.

Military OneSource offers free tax assistance through the MilTax suite of services, including tax preparation and filing software and telephone consultations with a tax professional. Contact a Military OneSource MilTax consultant for free at 800-342-9647. OCONUS/International? Click here for calling options. Or live chat to schedule a free consultation with a MilTax consultant or a financial counselor.

Military Leave: What It Is and How It Works

Service members walk with their equipment.

Current as of April 20, 2020

As part of the military pay and benefits package, military service members earn 30 days of paid leave per year. You start at zero and for every month of military service, 2.5 days of leave get added to your leave account. It doesn’t stop, but the most you can carry over from one fiscal year to the next fiscal year is 60 days, except in certain, very limited situations where you can carry over more.

Reserve component members, including National Guard, also accrue leave at the rate of 2.5 days for each month that they are on active duty order. Reserve components have some special rules for how and when they can use of their leave.

Service members are expected to use leave for any workday that they will not be available for work, as required by their command. They are also are expected to use leave for any day that they leave the vicinity of their duty station, as defined by their command.

COVID-19 special leave accrual update

The Department of Defense recognizes that the COVID-19 national emergency has significantly limited service members’ ability to take leave. The department also recognizes that leave is vital to health and welfare. That’s why Under Secretary of Defense for Personnel and Readiness Matthew Donovan signed a department-wide authorization on April 16, 2020, for service members to accrue and retain an additional leave balance of up to 120 days. Members performing active service from March 11, 2020, through Sept. 30, 2020, can accrue leave up to 120 days and retain unused leave until Sept. 30, 2023.

When can you take leave

Service members may request leave at any time. Approval will be at the discretion of the command, based upon a wide variety of factors including operational requirements.

Some commands may have specified times when all or portions of the command can take leave at the same time. This is sometimes referred to as “block leave” and may happen before or after a deployment or during a holiday period. Block leave refers to time when most or all of the unit takes leave at the same time (as a “block”). Commonly, block leave time is allowed during the summer and Christmas holidays, and before and after deployments.

Resources You Need – In Your Inbox

Learn about the latest benefits, programs and resources available to service members and families through the Military OneSource eNewsletters.

How to request leave

Every command will have their own procedures for requesting leave. It may involve a paper or electronic leave request form, sometimes called a “leave chit.” The command will then approve or deny the leave request.

The service member must be sure to notify the command when beginning their approved leave, often called “checking out” on leave, and when returning from leave, “checking in.” The policies and procedures for checking out and checking in vary between commands and may include being physically present, telephonic or electronic notification.

You’ve earned it – Use your leave or lose it

Leave time continues to add up as earned, but there is a limit to how much leave can be carried over from one fiscal year to another. Typically, if you have accrued more than two months of unused leave, you lose any amount that exceeds 60 days at the end of the fiscal year, Sept. 30.

A service member may be authorized to carry over more than 60 days leave for a period of time. This is called a special leave accrual and is usually authorized due to deployment to certain areas of the world, assignment to certain designated units, or operational requirements that prevent the service member from taking leave.

Selling Back Leave

Service members may sell back leave when they reenlist, when they extend an enlistment or when they separate from the military. You may sell back a maximum of 60 days of leave over the course of your military career. Military leave is sold back at your base pay rate and does not include any special pays or allowances.

The different kinds of military leave policy

As a service member, you have different types of leave available to you. This ranges from regular leave to emergency leave to maternity/convalescent leave and parental leave Learn more about the different kinds of military leave and even the process for selling leave back.

What is military leave? add

What is emergency leave? add

What is convalescent leave? add

What is maternity/convalescent leave and parental leave? add

What is terminal leave? add

Is sick time docked from leave? add

Can I sell back leave? add

Leave is an important part of your total military benefits package. Take advantage of some of your other military benefits while enjoying your leave. Learn more about your military pay and allowances as well as other financial benefits.

The Military’s A+ Financial Benefits to Protect Your Future

F-16 falcons fly in a row over mountains

As a service member, you’ve earned financial benefits to help protect your future. Take advantage of military benefits to shore up your personal finances – for both the short term and long term.

Benefits that can help set you up financially

Basic pay is the fundamental component of military pay. All members receive basic pay, and typically, it is the largest component of a service member’s pay. A member’s grade (usually the same as rank) and years of service determines the amount of basic pay received.

Pay Raise for 2020

Military personnel are receiving a 3.1% increase in their basic pay in 2020. This raise is for both active-duty and reserve service members.

Allowances are the second-most-important element of military pay. Allowances are moneys provided for specific needs, such as food or housing. Monetary allowances are provided when the government does not provide for a specific need. For example, the quantity of government housing is not sufficient to house all military members and their families, so those who are not able to live in government housing receive allowances to assist them in obtaining commercial housing. Those who live in government housing do not receive full housing allowances.

Special and incentive pays provide the services with flexible additional pays that can be used to address specific manning needs and other force management issues that cannot be efficiently addressed through basic pay increases. Unlike basic pay and allowances, which vary by pay grade and years of service, S&I pays can be used to improve recruiting and retention by increasing compensation in key occupation specialties or critical skill areas. These pays are also used to compensate for onerous or hazardous duty assignments or conditions. In addition, S&I pays can be used to provide incentives for service members to develop certain skills that are important to national security objectives.

Savings Deposit Program. Service members deployed to a combat zone get guaranteed 10% interest on money put into a savings account, up to $10,000 for each deployment. That’s unheard of outside the military. Bonus: You keep earning 10% interest up to three months after you return.

Thrift Savings Plan. Sure, retirement seems a long way off. But your future self will thank your present self if you earmark a portion of each paycheck to retirement via the Thrift Savings Plan. It’s the easiest money you’ll likely make, thanks to compound interest. If you stash $100 in a retirement account (earning 2% interest) twice a month for the next 30 years, you’ll be looking at a balance of $102,500. You have several plans to choose from. Bonus: It’s one of the lowest cost retirement savings plans out there, charging just 40 cents per $1,000 of investment each year.

Free college. Thanks to the Post-9/11 GI Bill, you can get the full cost of in-state tuition and fees at public colleges covered for up to four academic years, or contributions for a private college education. You’ll also get a housing stipend and up to $1,000 a year for books and tutoring. Benefits cover the cost of education and training programs, including undergraduate and graduate studies, vocational schools and technical training. Learn the ins and outs of different GI Bill programs. Bonus: Benefits may be transferable to a spouse or children. If your service ended before Jan. 1, 2013, you have 15 years to use this benefit. If your service ended on or after Jan. 1, 2013, the benefit won’t expire.

Affordable housing. Service members get a tax-free housing allowance when government quarters are not provided. The size of the monthly subsidy is based on your rank, location and family size. It is intended to cover part of your rent or mortgage payment so you can live off base comparably to civilians.

Low-cost life insurance. Service members have access to some of the lowest-cost life insurance available anywhere. You can provide your family with financial security at just 6 cents per $1,000 of insurance. That means for up to $400,000 of life insurance, you pay only $24 a month, regardless of age or health. You also get traumatic injury coverage for just $1 per month.

Other ways to build wealth

Low-cost loans. As a service member, you can get a low-cost home loan via the Veterans Administration – without having to put down a down payment or pay pricy private mortgage insurance.

Different ways to save. When joining the Thrift Savings Plan, you can choose from two tax options: either make contributions to retirement on a pre-tax case and then pay taxes on the amounts at retirement, or contribute after-tax dollars, letting the amount grow over time and never paying taxes on that savings. Bonus: if you receive tax-free combat pay, you don’t have to pay any tax on Roth TSP or Roth IRA contributions.

Tax deductions. You or your spouse are eligible for numerous tax deductions, some extended to all citizens in certain situations and others exclusive to service members and their families.

Contacting Military OneSource can put you on the path to making the most of your financial benefits. Our free resources, information and personalized specialty services can help you make the most of your benefits. Call 800-342-9647 or connect via Live Chat 24/7/365. OCONUS/International? Click here for calling options.

Beyond Military Pay: Your Service Member’s Robust Military Benefits Package

hands holding wallet with credit cards

As a member of your service member’s support network, you may have heard the good news that both active duty and reserve military personnel received a 3.1% military pay raise in 2020 – among the biggest in a decade. Beyond the salary bump, you’ll be glad to know that your loved one has several ways to be financially fit.

The military provides notable compensation benefits to your service member, ranging from paid vacation and retired pay plans that beats many private-sector employers to free or reduced cost housing, a host of special and incentive pays to free financial and tax consultations and more.

Newsletter Connects Friends, Family

Gain a better understanding of your service member’s military life with the Friends & Family Connection eNewsletter.

Military financial benefits

Allowances: In addition to base pay, service members may also receive housing and food pay. A basic allowance for housing helps your loved one offset the cost of housing. Whether they choose to live on base or out in town, BAH provides a reasonable amount each month to afford housing based on their rank and the area they live in.

Basic allowance for subsistence is a monthly allowance meant to assist service members in paying for meals. However, if your service member lives on base, they will not receive BAS but will have access to free meals on base.

Special and incentive pays: While base pay and allowances cover the fundamental components of military pay, special and incentive, or S&I, pays are used to compensate service members for hazardous or difficult duty assignments and to recruit and retain them. There are more than 60 special and incentive pays. Common S&I pays are:

  • Hardship Duty Pay: For service members at duty stations where the standard of living is significantly below the continental United States.
  • Assignment Incentive Pay: This incentive is paid to service members for unusual assignment circumstances like extended tours.
  • Hazardous Duty Incentive Pay: For service members who perform hazardous duties like air crewmembers.

Paid vacation: Service members receive 30 days of paid leave each year as well as all federal holidays. Whether it’s a short or long trip, your loved one can go on vacation and fully enjoy their time off while still receiving salary and any other allowances that are due to them. If a service member has accumulated over 60 days of paid leave, they must use the excess days or lose them by the end of the year.

Full military health and dental insurance: You can rest easy knowing that your service member is fully covered at no cost to them through TRICARE Prime. Active-duty service members will never pay out of pocket for any type of care within the network for this comprehensive medical insurance program. TRICARE also offers several plans that cover service members and their immediate family members at competitive rates.

Retired Pay: Service members who stay in the military for a full 20 year career will qualify for monthly retired pay, which provides a continuing source of income long after the member has ended their service. In addition to this “pension-like” benefit after a full career, new members and those who previously opted into the Blended Retirement System(BRS) can also earn government-provided contributions to a 401(k)-like savings account called the Thrift Savings Plan (TSP). This option is available to all members covered by BRS, even for those who do not intend to serve a full 20 year career. TSP is another avenue for service members to save and secure their finances for retirement. Service members can choose between a traditional or Roth account. Even if a service member decides not to retire from the military, they can roll their TSP into another 401(k) after separating from the military, or leave those funds in the TSP to continue growing until they reach full retirement age.

Free or reduced-cost housing: For those service members who are required to live on base, they can enjoy living for free in the barracks or dorms. Service members who receive a housing allowance are offered affordable housing options on base or out in town through the housing office on base.

Affordable life insurance: Service members are automatically signed up for Servicemembers’ Group Life Insurance through their branch. It offers low-cost coverage to service members for up to $400,000 at only $29 per month.

Free financial help: The military provides free financial perks to service members like financial counseling and tax services through Military OneSource. Your service member can be coached through several money-related issues like budgeting and money management, and MilTax allows them to easily prepare and file their taxes every year.

Military discounts: Maybe one of the greatest financial perks and least considered is military discounts. Service members have access to many perks like tax-free shopping at exchanges on base as well as discounts at the movies, restaurants, amusement parks and much more. And for their traveling needs they never have to worry about paying for luggage when flying within the continental United States.

Signing and reenlistment bonuses: At times, the military offers enlistment and reenlistment bonuses to service members in certain career fields. These bonuses are usually offered to help recruit and retain for jobs that are hard to fill or that require high skill levels, and they can range in the thousands. Each branch determines how much to offer. Bonuses are not guaranteed and change constantly at the discretion of each branch. For accurate information on bonuses, it is best to contact a local recruiting office.

You can be confident knowing that your loved one is being fully compensated while serving their country. Check out more Friends & Extended Family articles to keep connected with your service member’s military life.

Housing for Your New Service Member: Living in the Barracks

Service members playing a game of pool

During basic training and initial job training, all enlisted service members are required to live in the barracks. When service members move to their permanent duty station, only single members are required to live in unaccompanied housing, or barracks. Living in the barracks is also dependent on your loved one’s rank as well as the availability of space on each base.

Every service branch differs on what rank is required to live in unaccompanied housing:

  • Army and Marine Corps require single service members with pay grades E-5 and below to live in the barracks.
  • Navy requires single service members with pay grades E-4 and below to live in the barracks.
  • Air Force requires single service members with pay grades E-4 and below and with less than three years of service to live in the barracks, or dorms as they like to call them.

The Relocation Assistance Program or housing office can help single service members not required to live on base sort through their options. If your service member has dependents, each installation has a housing office where service members can find out what housing options are available to them and their families.

As your service member climbs the ranks, their living situation will change over time. After living in the barracks, they will have the option to live in military housing on base, military communities off base or choose to make their own living arrangements off base.

A closer look inside barracks and dorms

While you may feel a little out of touch with their military life, your service member can share with you their experiences of living on an installation and in barracks for the first time. Here are some things you can expect for your service member while living in the barracks:

  • Sharing a bedroom: Depending on the base, your service member may have to share a bedroom. Typically, it is large enough to fit two twin size beds, two desks and two closets. There are cases when a bedroom may hold more than two people. Sometimes, a service member will have a single bedroom and share a common area with another member.
  • Sharing a bathroom: Whether your service member has a single room or shares with others, they will typically share a bathroom in the barracks. At times there may be an in-suite bathroom or a community bathroom that is shared by a floor of service members. In some cases, the Air Force dorms will have private bathrooms for airmen.
  • Visitors allowed: After your loved one finishes training and moves to their first permanent duty station, they are typically free to have visitors. You can explore the base with your service member and in most cases, you can visit their rooms. While visitors cannot stay the night in the barracks, there are accommodations on base, if you choose, for visiting family members and friends, and your service member can stay the night with you.
  • Mail room: Mail does not go directly to service members. All mail is received and controlled by personnel in the mail room. Some bases have mail rooms located in the barracks, and others have a mail room located in a separate building. Typically, service members can access letters any time, but packages are only available for pick up during business hours.
  • No extra allowances: When your service member lives on base, they will not receive housing or food allowance. Instead, members only receive base pay and use their ID cards to eat for free in the dining facility on base.
  • Weekly room checks: Service members have their rooms checked for cleanliness at least once a week. They are also checked for unauthorized items such as candles and certain chemicals that may be considered hazardous. Rooms are expected to meet a certain standard during each check.
  • Community events: In barracks living, there are many events for your service member to attend. Of course, there are holiday events as well as movie and game nights to get them out of their rooms.
  • Recreation and entertainment: Each installation offers service members a wide range of recreation, sporting and fitness, arts and crafts, entertainment offerings and more through the Morale, Welfare and Recreation programs. Some installations even offer auto and other classes.

While there are high expectations for cleanliness and some restrictions, barracks living can be similar to apartment or dorm living, allowing service members quiet space to decompress, hang out with others, play videogames, and more.

To learn more about your service members new installation and the housing accommodations, go to MilitaryINSTALLTIONS, search by an installation and click on that base’s housing information.

Deductions, Allotments and What Comes Out of Your Military Pay

A servicemember counting out cash.

Like a coin, there are two sides of your military paycheck. There’s what goes into your paycheck – basic pay, allowances and special and incentive pays – and there is what comes out. You can see your deductions and allotments listed on your Leave and Earnings Statement, or LES. Here are some of the more common items you’ll see listed on your LES.

Military pay deductions: Taxes, SGLI, TSP and more

Everyone has deductions for taxes, including Social Security and Medicare. You probably have a federal tax deduction, and you may have a state tax deduction, depending on your state of legal residence.

Your federal and state taxes will be withheld based on the instructions you provided on your W-4, Employees Withholding Allowance Certificate. You can make updates to your withholding using MyPay. Here are other deductions you may notice:

  • Social Security deductions are 6.2% of your taxable military pays. Medicare taxes are 1.45% of your taxable military pays.
  • The Servicemembers Group Life Insurance program provides low-cost life insurance to military members. Every service member is automatically signed up for the maximum amount of SGLI coverage, but can elect a lower amount if so desired. In addition, members with SGLI coverage also have coverage under the SGLI Traumatic Injury Protection program.
  • Every active-duty enlisted and warrant officer in the Army, Marine Corps, Navy and Air Force has an automatic, non-voluntary deduction of 50 cents per month designated to fund the Armed Forces Retirement Homes.
  • The Family Servicemembers Group Life Insurance program offers low-cost life insurance to spouses and children of service members. Once registered in the Defense Enrollment Eligibility Reporting System, spouses and eligible children members are automatically enrolled in FSGLI. If coverage is not wanted, the service member may reduce or decline coverage using the SGLI Online Enrollment System. You can access the SOES through the MilConnect portal.
  • Thrift Savings Plan contributions are listed as a deduction on your LES. The contribution is forwarded to the TSP board at the beginning of the following month, and credited to your TSP account once it has been processed by the TSP agency.
  • Various types of government debts are listed on your LES. This may include debt from an overpayment, advance pay or advance BAH loans.

Military pay allotments

Meanwhile, any active-duty service member can set up allotments, or payroll deductions, from their paycheck to pay or repay certain expenses. There are two types of allotments: discretionary and non-discretionary.

Discretionary allotments include FEDVIP vision and dental premiums, commercial life insurance premiums, payments to dependents or other relatives, deposits to banks, credit unions, or investment companies, the payment of mortgage or rent, and deposits into the Department of Defense Savings Deposit Program.

Non-discretionary allotments include the purchase of savings bonds, repayments to military relief societies, charitable contributions to eligible organizations, court-ordered involuntary child and/or spousal support payments, government indebtedness, commercial debt, garnishments, and delinquent Government Travel Card balances.

How do military pay allotments work? With an allotment, half of the allotted amount is deducted from your mid-month pay, and that amount remains in the system until the other half is deducted from your end-of-month pay. At that time, the entire amount is submitted to the designated recipient.

How to set up a military pay allotment

Allotments may be set up through MyPay or by using DD Form 2558.

When you set up an allotment through MyPay, you will see a “no later than” date listed before and after you set up the allotment. This lets you know whether the allotment will start this month or next month. It is important to watch your LES carefully until you see that an allotment has been successfully started. Do not assume that any bill is being paid by a new allotment until you have verified that the payment is received.

Limits on military pay allotments

You can have up to six discretionary allotments per month, and any number of non-discretionary allotments, but you may not have more than 15 allotments per month.

You may not use allotments to purchase, lease or rent personal property. For example, you may not use an allotment for a car payment or for rental on furniture or appliances.

Members of the National Guard and reserves may set up allotments when they are called to active duty, active duty for training, or full-time training duty under orders specifying extended active duty for more than 180 days. Guards or reservists not on extended active duty may set up one allotment for insurance premiums, paid to a group life insurance program sponsored by their state Guard or the State Associations of the National Guard.

If you have questions about your pay and allowances, deductions and allotments, or any other questions about your military paycheck, you can check with the personal financial educators at your installation’s family service center, Or contact Military OneSource for a free session with a financial counselor – in-person, by phone or video.

Living Overseas on Military Pay: What to Expect

Airman holds money.

Overseas or OCONUS permanent change of station orders can be exciting, especially if you’ve never been outside of the continental United States. The military can help you with the added costs of an international move and living expenses abroad.

Here are tips for finding free military moving services, getting OCONUS allowances and budgeting for daily living expenses.

Overseas pay and allowances

Your service branch will help you move your household goods and even a personally owned vehicle to a new overseas duty station. This financial help is generally a one-time reimbursement of moving costs. You can start figuring out those costs by going to Move.mil to register for OCONUS moving help.

However, there are additional pays and allowances you may receive during your time overseas above your regular basic pay. Two of the main allowances overseas personnel receive are an overseas cost-of-living allowance and an overseas housing allowance.

Find OCONUS installation resources quickly.

The MilitaryINSTALLATIONS free online tool shows you available services and contact info at installations worldwide – plus maps, community reports and more.

Common overseas expenses for OCONUS moves

Those moving and OCONUS allowances, in addition to your basic pay, help with major expenses while you’re overseas. And with careful budgeting you can also manage daily living expenses like these:

  • Exchange rates: Local currency fluctuations affect both Overseas COLA and OHA payments. You will be paid in U.S. dollars, but how much that dollar can buy will depend on the local currency’s exchange rate. Use the official Overseas COLA and OHA calculators to determine the current pay system exchange rates and how a currency change may affect your payment. Prepare to pay a small fee whenever you need to convert cash dollars into the local currency.
  • Storage unit fees: You may not be able to take everything overseas with you. If you are not authorized non-temporary storage at government expense and you need to store items, you’ll need to budget for the monthly fee of a storage unit.
  • Overage baggage fees: Military moving services have weight limits on how much they’ll ship to your new home. If you go over your weight limit, you’ll have to pay added moving fees.
  • Car and local travel expenses: Before you ship your personal car overseas, consider the local cost of gas and maintenance. Many service members buy a used car when they arrive at a new station, then sell it before they return home. Without a car, add local transportation options like train or bus passes to your budget.
  • New clothing: OCONUS moves may mean dressing for different climates. See if you should purchase parkas or swimsuits in the United States and ship them over. It may make more sense to buy them after you arrive.
  • Cultural expenses: The adventure of living in a new place also means paying for things you may not expect. For example, in some countries you’ll only receive a utility bill once or twice a year – but that bill will be much higher than a “regular” monthly bill. You may also need to pay for drinking water at restaurants, rather than getting it for free. Ask your local sponsor for help budgeting for possible expenses like these.
  • Foreign sales taxes: New countries usually mean new sales taxes. Be prepared to pay higher local taxes on goods and services.
  • “Homesick” expenses: You may be craving peanut butter, but it may be hard to find or is very expensive overseas. Try checking with your base commissary or exchange first for deals on American products. Or, you can ask friends or family back home to ship them to you in care packages.

This is just an overview of the many financial decisions you may make during your OCONUS move and time living abroad. If you’d like some help planning and budgeting for your overseas adventure, you can schedule a free consultation with a Military OneSource financial counselor. They can give you a hand whenever you need it – before your move, while you’re settling in or when you’re coming home.

Financial counselors are just one way Military OneSource connects you to the services, programs and information you need to live your best MilLife. Let us give you a hand today.