Compensation pay taxable

[Joe18]

is compensation pay taxed while on military duty? I was mobilized with my USAR unit and the company I work for AT&T Mobility compensated my Military pay is that compensation pay taxable

[JohnW15 · Accepted solution]

Yes, this is taxable income.  These are considered to be “Differential Wage Payments.”

According to “Differential wage payments” on page 3 of IRS Publication 525, Taxable and Nontaxable Income:

“This is any payment made by an employer to an individual for any period during which the individual is, for a period of more than 30 days, an active duty member of the uniformed services and represents all or a portion of the wages the individual would have received from the employer for that period. These payments are treated as wages and are subject to income tax withholding, but not FICA or FUTA taxes. The payments are reported as wages on Form W-2.”