Another Tax Season is Right Around the Corner: Are You Prepared?

The next tax season will be here before you know it and we want to make sure that you are prepared for it. Now is the best time to double check everything is correct regarding your account, so you get your tax documents and have them when you need to 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 log in 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. You can download and print your current year tax statement, as well as prior year 1099Rs (up to four prior years for retirees). If you have them, you can also download and print IRS form 1095B, as well as the documentation for any taxable travel income received. 
 
You will have much earlier access to your tax documents through myPay. 1099Rs are generally available in myPay in late December, while paper copies are mailed in 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. 
 

Changing Federal Tax Withholding 

Now is also a good time to check and adjust your tax withholding, if needed. You can check your current federal withholding status through myPay, review your latest Retiree Account Statement, or call our customer care center. If you need to change your withholding status, this can be done by submitting an IRS Form W-4 or skip the form and update your withholding through myPay. The form can be found on our website at https://www.dfas.mil/raforms.Once you complete the form, the fastest way to submit it is through askDFAS by using the online upload tool. See the article on the askDFAS Refresh for more information on askDFAS. The form can also be mailed or faxed. Please see our Customer Service page for the mailing address and fax number https://www.dfas.mil/racustomers

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.  
https://www.irs.gov/individuals/tax-withholding-estimator
 
DFAS cannot provide tax advice. Please consult a tax professional or the IRS. 
 

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, 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 military retired pay.  
 
Please note: the IRS requires any individual claiming exemption from federal withholding to provide a new IRS 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