[FONT=Arial, Helvetica, sans-serif]The Defense Finance and Accounting Service (DFAS) retired pay chief met with MOAA and Military Coalition partners this week to provide an update on several ongoing programs. [/FONT]
[FONT=Arial, Helvetica, sans-serif]DFAS supports over 2.6 million military retirees, annuitants, separation pay recipients, and former spouses - the oldest being a 109-year-old Navy retiree. [/FONT]
[FONT=Arial, Helvetica, sans-serif]DFAS is particularly touting the electronic MyPay option that lets DFAS customers access and update their accounts by computer. As of February 2009, 41% of retirees have MyPay accounts. [/FONT]
[FONT=Arial, Helvetica, sans-serif]Retirees can create a new account by clicking on the "New PIN" button on the MyPay home page to make changes to federal and state tax withholding, direct deposits, addresses, allotments, and savings bonds. MyPay customers also can view their Combat-Related Special Compensation (CRSC) and/or Retiree Account Statements (RAS). [/FONT]
[FONT=Arial, Helvetica, sans-serif]MyPay access is a particular advantage right now, since many retirees and annuitants will want to make some withholding adjustments in the wake of DFAS' recent implementation of the American Recovery and Reinvestment Act (the recent economic stimulus law). Under the new law, DFAS was required to reduce federal tax withholding starting with the May retired pay check. [/FONT]
[FONT=Arial, Helvetica, sans-serif]Depending on circumstances, that change could leave many retirees "under-withheld" and owing more taxes than expected next April. [/FONT]
[FONT=Arial, Helvetica, sans-serif]Retirees in that situation have several options: [/FONT]
[FONT=Arial, Helvetica, sans-serif]Option 1 - Refer to your December 2008 Retiree Account Statement for your "old" withholding amount and either: [/FONT]
[FONT=Arial, Helvetica, sans-serif](a) Use MyPay to restore your "old" (higher) withholding amount, or|
[/FONT][FONT=Arial, Helvetica, sans-serif](b) Fill out and mail a new W-4 to DFAS that restores the "old" (higher) withholding; [/FONT]
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[FONT=Arial, Helvetica, sans-serif]Option 2 - Submit estimated tax payments to the IRS right now in April, and then again on June 15, September 15, and January 15 (2010) with payments of $100 or $200 each time (to make up the $400 (single) or $800 (married) total withholding difference). [/FONT]
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[FONT=Arial, Helvetica, sans-serif]Option 3 - Do nothing. If you have routinely received federal tax refunds of $1,000 or more, DFAS' new withholding reduction shouldn’t leave you owing any additional federal taxes on your 2009 return. The refund will simply be $400/$800 lower than it usually has been (depending on marital status). [/FONT]
