Related Benefits Articles

  • Taxable Income From Retired Pay
    Military.com
    Retired pay, like other income, is subject to Federal income taxation unless wholly or partially exempted by statute. DFAS-CL c...
  • Video Helps Retirees Avoid Owing Back Taxes
    Military.com
    Military retirees often find they owe back taxes after transitioning into a civilian career. Learn how you can avoid this probl...
  • Tax time
    State Retirement Income Tax
    Military.com
    Some States exempt all or a portion of retired pay from income taxation. Some States exempt disability retired pay in the same ...
  • Retiree Pay Garnishment
    Military.com
    Retired pay may be garnished for enforcement of a retired servicemember's legal obligations to provide child support or make al...
  • State taxes
    State Tax Information
    Military.com
    Below is information on state income tax rules, organized alphabetically by state.

Most Popular Military Pay Articles

Military Pay Charts

Retired Pay Tax Withholding

All non-disability retired pay is subject to withholding of federal income taxes. The amount withheld is dependent upon the taxpayer's amount of wages and the number of exemptions claimed.

The amount withheld is an approximation of the ultimate tax liability. All taxes withheld are forwarded by the respective service to the IRS Center, and the taxpayer claims the amount withheld from his or her retired pay as a credit against his or her final liability shown on his income tax return filed after the close of the tax year. Where the amounts withheld by the Defense Finance and Accounting Service (DFAS) exceed the tax liability shown on the final return, a refund of the overpayment will be made by the IRS Center directly to the taxpayer. Where the amounts withheld are insufficient to cover the final tax liability, one must pay the difference directly to the IRS.

Over-withholding. To avoid having too much income tax withheld, if you have unusually large itemized deductions, alimony deductions, or tax credits, you may claim additional withholding allowances. To set the number of allowances, complete the computation on IRS Form W-4 and submit it to DFAS or your services pay center.

Under-withholding. If your spouse is employed or you work at more than one job, you can avoid having insufficient taxes withheld by completing form W-4 claiming fewer exemptions or asking for additional withholding. These actions may preclude the necessity for submitting a declaration of estimated taxes and making quarterly payments. An agreement for additional withholding is considered as having been ratably withheld over the entire year.

Military News App by Military.com

Download the new Military.com News App for Android on Google Play or for Apple devices on iTunes!

© 2016 Military Advantage