Military Retiree Pay Date Changes for 2011 creates 13 Pay Dates for Service Members and Former Spouses
On 2 September 2011, DFAS announced changes in the pay dates for military retirees. The 2011 National Defense Authorization Act (NDAA) requires that military pay days falling on a weekend or national holiday be paid on the previous business day.
Since 1 January 2012 falls on a Sunday, DFAS will pay military retirees (and former military spouses who receive a division of the service member’s retired pay) on Friday, 30 December 2011. This creates 13 pay dates for calendar year 2011.
It also applies to retiree allotments, garnishments, and court-ordered former spouse and child support payments. Annuity payments are not affected.
Areas where you may have concerns are:
- Federal Student Aid
- Need-based Programs
Military Retiree Pay Date Impacts Taxes
The first tax issue is fairly simple. If you receive more money this year, and all factors are the same as last year, then you will owe more taxes. Two ways to try and change your withholdings are:
- Go to My Pay
- Complete a new IRS Form W-4 or W-4P, or change state withholding amounts using a DD 2866. Mail or fax the form to:Defense Finance and Accounting Service
U.S. Military Retired Pay
P.O. Box 7130
London, KY 40742-7130
The second thing you might do is pull your tax return from last year and see if any items are dependent on income threshold limits. Check to see if you will still be eligible based on your estimated increased income. You might also call your tax advisor and ask this same question.
Two items with income thresholds are the Child Tax Credit and the Earned Income Credit
The Child Tax Credit Income Limit Thresholds for 2011 are:
- $110,000 on a joint return
- $75,000 for an unmarried individual
- $55,000 for a married individual filing a separate return
The Earned Income Credit (a max amount of $5,751 in 2011) threshold limits are:
- $43,998 ($49,078 married filing jointly) with three or more qualifying children
- $40,964 ($46,044 married filing jointly) with two qualifying children
- $36,052 ($41,132 married filing jointly) with one qualifying child
- $13,660 ($18,740 married filing jointly) with no qualifying children
These are just two examples. There are other tax items impacted by income as well. How about the limits for IRA and Roth IRA contributions? The best way to decide how 13 military paychecks will impact you is to review your return from 2010 and check with a tax advisor.
Military Retiree Pay Date Changes and Federal Student Aid
If you have children applying for federal student aid, the military pay date changes might increase your income enough to force you into using a different formula for computation of the Expected Family Contribution (EFC) toward college.
For the 2012-2013 Award Year.
- Automatic Zero EFC: Income threshold limit is $32,000
- Simplified EFC Formula: Income threshold limit is $49,999
Don’t let one month of pay throw your family into a different formula category. For a no-nonsense straight forward information on computation of federal student aid, see the book How You Can Maximize Student Aid.
Military Retiree Pay Date Changes Impact Need-Based Programs
If you are receiving any type of need-based program such as food-stamps, reduced school lunch, or perhaps low income housing, a declared increase in annual pay may impact you.
Military Retiree Pay Date Changes – Other Impacts?
Advance planning will ensure no surprises when 2012 rolls around. These were ideas immediately came to mind when thinking about receiving 13 months of military retiree pay in one year. If you can think of any other areas or tips to make adjustments in your life, add them to our comment area.