It depends. The cost of living allowance (COLA) and the may not be included if the instruction below applies to you.
- Cost-of-living allowances (COLA): If you are stationed outside the continental United States or in Alaska, your gross income does not include cost-of-living allowances granted by regulations approved by the President of the United States (other than amounts received under Title II of the Overseas Differentials and Allowances Act). Cost-of-living allowances are not included on your Form W-2.
- Lodging furnished to a principal representative of the United States: Lodging (including utilities) provided as an official residence to you as a principal representative of the United States stationed in a foreign country is not taxable. However, amounts paid by the U.S. Government for your usual household expenses are taxable. If amounts are withheld from your pay to cover these expenses, you cannot exclude or deduct those amounts from your income.
You should be able to rely on the income on your W-2 to complete your return. If you have more questions please enter additional details and we will help.
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