I recently received a question regarding the taxation transitional compensation for abused dependents. In researching my answer, I noticed that there is a lot of information on the subject. However, most of this information seems to be in the form of laws, directives, and instructions, which doesn’t make it user-friendly for the people who might need it. This article is my attempt to make this topic a little less intimidating for the people who might need to take advantage of this program.
This article is written primarily for the mil-spouse who might need to find out more information. However, it’s also written for the benefit of friends or family members who might be trying to help that mil-spouse, who might not be aware that such a program exists. Finally, this article is a primer for the accredited financial counselors (AFCs) who might have heard about this program, but are not familiar with the references and instructions. For AFCs, I’ve listed the DoD & service-specific references throughout this article so you can learn more about how to help your customers through the application process.
This article is not meant to be a comprehensive guide, but merely a starting point to help people get to the right answer.
Introduction: What is Transitional Compensation for Abused Dependents?
Simply put, transitional compensation for abused dependents (referred to as transitional compensation for the rest of this article) is payment to qualifying spouses & children of servicemembers separated from service or convicted at courts-martial due to ‘dependent-abuse offenses.’
Furthermore, this program allows for commissary & exchange benefits as part of the transition. Finally, the program allows for limited medical & dental treatment. Finally, according to the DoD Financial Management Regulation, transitional compensation payments are not taxable. Transitional compensation recipients should not expect to receive a Form 1099 for tax purposes. Also, recipients need not report transitional compensation payments on their tax return.
How Much is Transitional Compensation?
According to DoD Policy, transitional compensation for a mil-spouse is at the same rate as defined in 38 U.S. Code §1311 – Dependency & Indemnity Compensation to a Surviving Spouse. There is also an additional amount for children under this section. For children without a mil-spouse parent, the amount is the same as the rate defined in 38 U.S. Code §1313 – Dependency & Indemnity Compensation to Children. You can find annual updates to these payments on the DoD Comptroller’s website.
How Long Does Transitional Compensation Last?
According to DoD policy, transitional compensation does not last more than 36 months. The policy also describes situations in which it would last less than 36 months. These include:
- Situations in which the servicemember’s obligated service (enlistment for enlisted personnel) is less than 36 months
- Qualifying offense is remitted or reduced to a lesser, non-qualifying offense
- Disapproval of administrative separation by competent authority
There are also forfeiture provisions. These include:
- Cohabitation (living with the servicemember who was separated)
- Being an active participant in abusive behavior
Because of these situations, it is important to become familiar with the DoD Policy as well as service-specific guidelines, outlined later in this article.
How do I know if I’m eligible?
Many people who are eligible for transitional compensation may not know whether they’re eligible. If you believe that you’re in a situation that might qualify, the first thing you should do is set up an appointment with your installation’s financial counselor, chaplain or legal office.
If you aren’t close to an installation or cannot find someone on your installation to assist, please contact MilitaryOneSource.mil. They have trained counselors who can assist you with a variety of needs. Please take care of yourself and your family. All it takes is a phone call or online chat to start the process.
How do I apply?
This goes hand in hand with the previous question. If you’re able to set up an appointment with your installation’s financial counselor, chaplain or legal office, they’ll probably be able to help you fill out your Transitional Compensation Application form and get it to the right office. By service, below are the starting points for you to get more information about claims submission:
- Army: Installation Family Advocacy Program (FAP) Manager or victim advocate
- Navy: Servicemember’s servicing personnel activity. Installation Fleet & Family Service Center (per the Navy Instruction, but assume this means Fleet & Family Support Centers)
- Air Force: Installation Military Personnel Flight
- Marines: Installation Family Advocacy Program (FAP) Manager
- Coast Guard: Family Advocacy Program Manager office
Transitional compensation isn’t just a DOD policy, it’s codified by U.S. Law. 10 U.S. Code §1059 authorizes the Secretary of Defense to establish a program to pay monthly transitional compensation to abused dependents. DoD Instruction 1342.24, “Transitional Compensation for Abused Dependents,” further clarifies this as a matter of DOD policy. Also, each service has its own policy:
- Army: AR 608: Army Community Service, Appendix H
- Navy: OPNAVINST 1750.3: Transitional Compensation for Abused Dependents
- Air Force: Air Force Instruction (AFI) 36-3024, Transitional Compensation for Abused Dependents
- Marines: MCO 1754.11: Marine Corps Family Advocacy & General Counseling Program
- Coast Guard: Commandant Instruction 1754.16A: Transitional Compensation and Other Benefits for Abused Dependents
Transitional Compensation is a very important program for those family members who need assistance. While the DoD & services have done a great job implementing this program, it appears that many dependents may be unaware that:
- Transitional compensation exists for their benefit
- What benefits are included
- How to apply for transitional compensation
- Who to talk to
Although this article might help close some of the gaps, the most important aspect is getting access to the right office & resources. To that point, please feel free to share this article.