Military-specific tax issues in Wisconsin divorce

Military-specific tax issues in Wisconsin divorce

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.

Published by David Kowalski

Attorney David Kowalski is the owner of Kowalski Family Law, handling all family law cases from divorce, paternity, child custody, termination of parental rights, restraining orders, and guardianships.

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