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Fall is for… Taxes?


Taxes. Everyone’s favorite subject… especially months before they have to be filed. Actually now is the best time to double check that everything is correct regarding your documentation so there are no hiccups when you do file.

Start with myPay

The best tool DFAS offers for ensuring a smooth tax season is myPay (https://mypay.dfas.mil). The most important step to take now is to login to your myPay account, and check and update your mailing address.

An easy, online stop for your tax season needs, myPay offers printing or downloading of your tax statements for your retired pay or your annuity pay. You can print/download your current year tax statement, as well as prior year 1099Rs (up to four prior years for retirees and up to two prior years for annuitants). If you have them, you can also print/download IRS form 1095B, as well as the documentation for any taxable travel income received.

You’ll have much earlier access to your tax documents through myPay. 1099Rs are generally available in myPay in late December, while paper copies aren’t mailed until mid-to-late January.

If you haven’t logged in to myPay in a while, this is a good time to log in and update your password, before the busy tax season.

See our myPay article in this issue for information about requesting/changing a password and a reminder on how to reactive your myPay account or how to set up your login for the first time.

Changing Federal Tax Withholding

Now is also a good time to check and adjust your tax withholding, if needed.

     Use the IRS Tax Withholding Estimator

The IRS has an online Tax Withholding Estimator to help you determine how much tax you need to have withheld. The calculator helps taxpayers estimate if the right amount is withheld from their income to cover their tax liability. The estimator uses a simple, six-step question-and-answer format using information like marital or filing status, income, withholding, adjustments, deductions and credits.

www.irs.gov/individuals/tax-withholding-estimator

DFAS cannot provide tax advice. Please consult a tax professional or the IRS.

     Change Your Federal Withholding in myPay

It’s easy to change the amount withheld for federal taxes on the myPay site by clicking on the Federal Withholding link.

Once there, click on the yellow pencil to go to the edit page. On the edit page, you can also enter information about multiple jobs, change your number of dependents, add additional income, make additional deductions or have extra tax withheld. The blue bar tells you when you can expect the changes to go into effect.

State Taxes for Retirees

Retirees can start, stop or change their State Income Tax Withholding (SITW), but only if that state has an agreement in place allowing DFAS to withhold state tax. In some states, but not all, portions of your retired pay may be tax exempt. Because tax obligations vary from state to state, contact your state's department of revenue regarding taxability of your military retired pay.

Any changes to SITW must be made in writing, by submitting a DD 2866 form (https://www.esd.whs.mil/Portals/54/Documents/DD/forms/dd/dd2866.pdf) or by using myPay. DFAS can only withhold income tax for one state at a time and the designated state must have signed the standard written SITW agreement with the Department of Defense.

More detail on changing SITW is available on the DFAS website at https://www.dfas.mil/retstatetax

Federal Taxability of Retired Pay

Military retired pay is paid for many different reasons under many different laws. There are differences in the types of pay a military retiree might receive and the tax laws that apply to them. Whether a portion or all of an individual’s military retired pay is subject to federal income taxes depends on his/her individual circumstances. 

A military retiree can either use myPay or send an IRS Form W-4 to alter the amount DFAS withholds for federal income taxes from their military retired pay.

An individual’s choice to have no withholding for federal taxes does not impact whether the individual’s military retired pay is actually subject to federal income taxes. Ultimately, the IRS will determine the amount of taxes owed on the military retired pay. 

Please note: the IRS requires any individual claiming exemption from federal withholding to provide a new Form W-4 at the beginning of each tax year certifying their exemption from withholding.

Please see our webpage regarding taxation of retired pay: https://www.dfas.mil/retpaytax

Page updated Sep 28 2022