You won't get reimbursed for PCS costs on your tax return; the military will reimburse you separately as part of your military pay.
After completing the move, you must submit a travel voucher listing your expenses and the military will send you a separate check for the PCS reimbursement.
The amount reimbursed will be reported on your DFAS Form W-2 in Box 12, Code P. The amount with code P will transfer to Line 4 of Form 3903 for moving expenses.
If you follow these steps you won't have to pay tax on this amount.
To exclude this payment from taxable income, you have to complete Form 3903 and report the 'moving expenses' (travel costs) you incurred during the move.
In the Moving Expenses interview:
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Check that "My move to the new locations was work-related";
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Select "Employee";
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Answer Yes to "Did you work or do you expect to work full-time for at least 39-weeks during the first 12 months after the move"
- Calculate mileage as Old Home = Old Duty Station = Old Workplace, New Workplace = New Duty Station
- For Moving Expenses, enter the amounts you incurred on the move.
If your allowable moving expenses are more than the amount of reimbursement, you may get an additional deduction on your tax return. If a moving expense deduction is computed, it will be reported on Line 26 of Form 1040.
