I get many questions from managers regarding how to deal with and verify income for members of the military. Understanding the military pay system is confusing even for those in the military; it can be impossible for persons not familiar with military jargon. So, here is a little primer on how to verify the income of members of our military.
The first step is to have the military member provide copies of their last four to six Leave and Earning Statements (LES). Every member of the military has access to these on their “MyPay” account. The LES is a comprehensive statement of a member’s leave and earnings showing entitlements, deductions, allotments (these fields are not used for Reserve and National Guard members), leave information, tax withholding information, and Thrift Savings Plan (TSP) information. Members of the military are encouraged to keep their LES each month, so many will have them without going on-line.
The LES normally covers one calendar month, and will show the basic pay as well as all allowances. These are the categories of pay that will normally be counted. The LES will contain many acronyms that may be unfamiliar to managers; there are more than 60 allowances, special and incentive pays, but here are some of the more common:
*Clothing Allowance: this is an annual payment and is available only to enlisted personnel. It varies by branch of service (the Marine Corp is the highest and Air Force is the lowest) and by sex (female is higher than male). It ranges from $245 per year (Basic rate for a male in the Air Force) to $637 per year (Standard allowance for a female Marine). This will only show up on the LES for the enlistment month of the member, so be sure to get a copy of that LES or go to the defense department website (militarypay.defense.gov/pay) to find the appropriate allowance.
*Hardship Duty Pay (HDP): This is paid to service members assigned to locations where living conditions are substantially below those conditions in the U.S. Examples are Haiti, Rwanda and Serbia.
*Assignment Incentive Pay (AIP): This is paid to service members for unusual assignments. For example, service members who have involuntarily extended tours in Iraq and Kuwait will receive an addition $200 per month in HDP and $800 per month in AIP. AIP is capped at a maximum of $3,000 per month.
*Hazardous Duty Incentive Pay (HDIP): This is generally $150 per month for duties such as parachute jumping, explosives demolition, and flight deck duty.
*Family Separation Allowance (FSA): this is provided to members when their dependents cannot live with them or near their permanent duty station. This allowance is $8,33 per day, capped at $250 per month.
*Basic Allowance for Subsistence (BAS): This is $357.55 per month for enlisted personnel and is to offset the cost of meals.
*Basic Allowance for Housing (BAH): This is for members who do not receive government-provided housing. The amount depends on location, pay grade and whether the member has dependents. The amount can vary greatly. For example, the allowance for an E-1 with dependents in Petersburg, VA is $1,275 per month, but the same family would have an allowance of $3,474 in New York City.
*Hostile Fire/Imminent Danger Pay (HFP/IDP): IDP is available at the rate of $7.50 per day up to $225 per month, and is available to personnel assigned to a designated IDP area. HFP is determined by the local commander based on whether a member is subject to hostile fire. This is $225 per month, without a daily rate. Members cannot receive both HFP and IDP in the same month. For purposes of housing programs governed by HUD regulations, such as Section 8, RD Section 515 and LIHTC, HFP is the only allowance that is excluded from income.
Keep in mind that Reserve and National Guard also receive LES statements. When verifying the income of Guard and Reserve, don’t forget the ask for the LES that shows the two week annual active duty for training (“ACDUTRA”). This can be substantial and may have an impact on eligibility.