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When you live overseas, off-base, you receive an Overseas Housing Allowance. OHA pays for your rent (up to a limit) and also provides you with an allowance for your utilities. There are two tricky things about OHA. The amount of dollars paid changes every month, with the exchange rate, and the bills it is supposed to cover don’t always show up in a timely manner. We received OHA for five years while living overseas. At first the budgeting was hard. But then, I figured out a way to keep the money straight and be sure that we always had the right funds to pay our bills.
First, let’s talk about the craziness of bills overseas. Utility bills can be large, and they don’t always come in nice monthly or bi-monthly schedules like we are used to in America. It is essential that you keep your utility money aside so that you will be able to pay when your landlord shows up with a 3000 Euro gas bill. (This has happened to me.)
I recommend setting up a separate bank account to be used solely for your rent and utility money. When we lived overseas, I automatically transferred my husband’s OHA payment directly to our housing account each payday. I used that account only to pay our rent, utilities, and any other bills that were directly associated with the house.
When utility bills didn’t come in a timely manner, or we didn’t need to fill the oil tank for many months during the summer, the money would accumulate until bills arrived or we needed to buy heating oil or propane or whatever. This saved me a lot of stress.
As a bonus, most people don’t end up spending all of their utility allowance. That money makes a great PCS savings account. Plus, you’ll be closer to living off your actual pay, which makes the transition back to the US less painful.
While your OHA amount is calculated in the local currency, it is paid in US dollars. This means that you will get a different amount each month, depending on the exchange rate in effect.
Let’s look at a hypothetically E-5 with dependents at Ramstein Air Base in Germany. Her maximum rental allowance is €1300 per month, plus the utility allowance of €651 per month. This means her total OHA payment will be €1951, assuming that she has spent her full rental allowance. Sounds simple enough, but €1951 won’t be the same number of US dollars each month. Depending on where the exchange rate is on any given day, it could range by hundreds of dollars per month. Just searching through the last year’s figures, it could be as little as $2109, or as much as $2424. Even though the dollars still represent the same number of Euro, it can be confusing and frustrating when you are trying to build a spending plan and the amount you receive varies every month.
My Solution To Overseas Housing Allowance Payments
There are two ways to handle this:
You can use an average exchange rate
You can transfer exactly the amount of the OHA payment each month
Which method is better for you depends on how much your exchange rate varies, and how organized you are. If your local currency’s exchange rates tend to go up and down within the same range, you might be perfectly fine choosing an average number to use across the year, and setting up an automatic transfer or allotment for that amount. However, if you live in a country where there are larger shifts in exchange rates, or if your budget is very tight, you might find it better to manually enter the amount of the transfer each month. You can see the amount of your OHA on your monthly Leave and Earnings Statement. In my case, I found that an average amount, rounded up to an easy number, worked well.
This method was great for our family’s spending plan. A set amount was transferred from our primary bank account to our OHA account with each paycheck. Rent and electricity were paid from that account automatically. Heating oil and propane bills were paid using a debit card attached to that account. I never had to look at the balance in my primary checking account and mentally account for the fact that I’d need to buy four tanks of heating oil to get through the winter. With a separate housing account, it is all tidy and efficient.
This certainly isn’t the only way to deal with OHA and housing costs overseas. Do you have other ways to deal with your OHA payments? I’d love to hear your tips.
Your OHA/LQA allowance is the lesser of your OHA/LQA ceiling (limit) or the rental amount; you are paid dollar for dollar for your rent, you cannot pocket any amount between your rent and your OHA/LQA ceiling. If you decide you will spend out-of-pocket costs, that is your prerogative, personnel decision, and choice.
Yes.The pay system will calculate your “equivalent rent” amount as the purchase price divided by 120. Why doesn't OHA cover all of my housing costs? OHA is designed to partially offset the cost of housing, so members can be expected to incur out-of-pocket expenses.
The Overseas Housing program enables service members assigned overseas to privately lease housing on the economy. This program is a reimbursem*nt system that takes into consideration the amount service members spend on rent, utilities and associated move-in costs.
The Overseas Housing Allowance (OHA) is a cost-reimbursem*nt allowance and is designed to offset housing costs. It includes three separate components: rent, utilities/recurring maintenance, and a move-in housing allowance (MIHA).
If you don't spent it all, that just means the rest gets included in your taxable income. No additional penalty. 2. I can only designate a certain percentage of my income, or only change my designation at specific times of the year.
Examples of reimbursable expenses include rent, electricity, gas, water, and realtor fees, if customary, reasonable, and legal under local law. Living quarters allowance rates are categorized by "quarters groups" based on the employee's grade level and his/her family size.
The foreign housing exclusion allows expats to subtract specific overseas housing costs from their taxable earnings. A base housing amount of 16% of the maximum foreign earned income exclusion is subtracted.
Overseas Housing Allowance (OHA) is a tax-free monthly allowance paid to service members stationed OCONUS and authorized to live in private housing. OHA helps to pay for housing and includes rent and utility/recurring maintenance expenses.
OHA, for the most part, is a dollar-for-dollar reimbursem*nt for actual housing costs up to a predetermined maximum amount. BAH, on the other hand, is a fixed payment to servicemembers. OHA requires that servicemem- bers document their rental costs.
There are no standard amounts for housing allowance as a whole. The IRS guidelines say to use the fair market rental value of your housing and housing expenses (i.e., gas, electric, cable, etc.).
Specifically, the base housing amount is 16 percent of the maximum foreign earned income exclusion amount (computed on a daily basis), multiplied by the number of days in the applicable period that fall within the Page 2 taxable year.
You may exclude from gross income certain items whether they are furnished in kind, as a reimbursem*nt, or as an allowance. Among other items, you may exclude: Living allowances, such as the BAH (Basic Allowance for Housing), BAS (Basic Allowance for Subsistence), and OHA (Overseas Housing Allowance)
Choice: Especially if you have a family, living off base provides you with a lot more choice for your home. This allows you much more freedom in your housing options; for example off base, you are more likely to find a detached single family home, more privacy, school district choice, and many other options.
Reporting Requirements: Although the housing allowance can be excluded from gross income for federal income tax purposes, it must still be reported on your tax return. Specifically, you must report the total amount of the housing allowance received as income on Form 1040, U.S. Individual Income Tax Return.
The foreign housing exclusion allows expats to subtract specific overseas housing costs from their taxable earnings. A base housing amount of 16% of the maximum foreign earned income exclusion is subtracted.
LQA is granted to DoD Civilian employees to help defray the annual cost of suitable, adequate living quarters for the employee and his/her family at a foreign post where government-leased or governmnet-owned housing is not provided.
Foreign Service Officers who live in government-sponsored housing do not pay rent, nor do they pay for basic utilities, except for personal telephone service. At overseas posts where the government neither owns nor leases accommodations, Foreign Service Officers are given a Living Quarters Allowance.
If a member is serving an UNACCOMPANIED overseas tour, the member is eligible for BAH at the "with dependents" rate, based on the dependent's US residence ZIP Code, plus OHA at the "without dependents" rate, if the member is not furnished government housing overseas.
Introduction: My name is Terence Hammes MD, I am a inexpensive, energetic, jolly, faithful, cheerful, proud, rich person who loves writing and wants to share my knowledge and understanding with you.
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When you live overseas, off-base, you receive an Overseas Housing Allowance. OHA pays for your rent (up to a limit) and also provides you with an allowance for your utilities. There are two tricky things about OHA. The amount of dollars paid changes every month, with the exchange rate, and the bills it is supposed to cover don’t always show up in a timely manner. We received OHA for five years while living overseas. At first the budgeting was hard. But then, I figured out a way to keep the money straight and be sure that we always had the right funds to pay our bills.
First, let’s talk about the craziness of bills overseas. Utility bills can be large, and they don’t always come in nice monthly or bi-monthly schedules like we are used to in America. It is essential that you keep your utility money aside so that you will be able to pay when your landlord shows up with a 3000 Euro gas bill. (This has happened to me.)
