Certain aspects of a servicemember’s pay may be taxable or tax-exempt. These distinctions must be considered when accurately establishing the servicemember’s net income for support purposes.

Tax-exempt income includes the following:

  1. earnings received while the servicemember is in a combat zone. This exemption is on a month-to-month basis. If the member is in a combat zone for at least one day of the month, all income that month is tax-exempt. Bonuses, special pay, and re-enlistment pay received while in a combat zone are also tax-exempt.
  2. BAH (basic allowance for housing) and BAS (basic allowance for subsistence)
  3. Disability pay

For maintenance purposes in a Wisconsin divorce, properly accounting for taxation could have a vital effect. Consider the following:

Basic pay: $70,000

BAH: $8,000

BAS: $8,000

Total: $86,000

Accounting for all income as taxable would lead to a potential maintenance payment of $2,600 monthly. Correctly accounting for tax-exempt income would make the payment $2,800 monthly.

Attorney David Kowalski routinely handles military divorces for both servicemembers and their spouses. Contact him at 608-709-5000 with any questions.

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