The National Directory of Certified Public Accountants

Ask A CPA - Armed Forces Tax Information

What Is The Tax Ramifications Of Military Differential Pay?

Military differential pay is wages and should be reported in box 1 of Form W-2 as wages for income tax purposes. Military differential pay is includible as wages for income tax purposes on Form W-2, but is excludable from social security and Medicare taxes (FICA).

If you need professional help with "Armed Forces Tax Information" or have other tax questions, we can help you find a local licensed CPA for a free, no-obligation consultation.