You need to determine whether any moving allowances or reimbursements provided by the government should be included in a U.S. Armed Forces member's income, and how to accurately report the deduction on Form 1040.
The most common form of military move is the Do It Yourself (DITY) move. In a DITY move, Armed Forces members typically move their own household items in a personal or rented vehicle. The U.S. Armed Forces provides an incentive payment equal to 95 percent of the estimated cost to the government for DITY moves. When the move is completed, the Armed Forces member provides receipts and paperwork to substantiate authorized expenses. The net financial profit is taxable, and is reported on a separate Form W-2.
Reporting a DITY Move
DITY payments are entered as income on line 7 of Form 1040.
Armed Forces members may not take a moving expense deduction based on the expenses approved by the finance office when settling the DITY move, as these expenses have already been used to reduce taxable income.
Captain Cook received orders for a PCS. Using his own vehicle, he packed his household goods and drove to the new duty station. The Air Force estimated that the move would have cost the government $2,500. Captain Cook's actual expenses for the move were $1,750. He received a payment for $2,375 (95 percent of the government's estimate). Box 1 on Form W-2 shows only $625 ($2,375 minus $1,750) for the DITY move. Captain Cook cannot deduct any of his expenses, since he was already reimbursed.