Defense Finance and Accounting Service customers may be affected by recent changes to the tax law, tax tables and other legislation. Some of the changes include:
· Reduction in Social Security tax withholding from 6.2 percent to 4.2 percent for 2011
· Expiration of the Making Work Pay credit, which may increase the amount of wages subject to income tax withholding
· 1.4 percent pay increase for military service members
The amount of the changes in net pay will depend on several factors including:
· Income level
· W-4 elections
Military Reservists and National Guard members will be the first to see potential changes in their pay as a result of the law. Any changes should have been reflected in their Jan. 5 paycheck. Active duty military personnel should have seen their pay changes in their Jan. 14 paycheck and reflected in their January Leave and Earning Statement.
DOD civilian and other federal employees paid by DFAS will see social security withholding changes reflected in paychecks based on the pay period ending Jan. 1 with pay dates on January 7, 11 or 13. The tax withholding changes for 2011 will be implemented for the pay period ending Jan. 15 with pay dates on Jan. 21, 25 or 28.
Military retirees and annuitants will see the changes reflected in their March 1 payment. Retirees can view the changes in myPay Feb. 1 and annuitants can view the changes in myPay Feb. 18. Account statements with the new net pay amounts reflected will be mailed to all retirees and annuitants affected by the change in February. Review your pay statement to see how these changes will potentially affect you.
DFAS customers with questions on the changes should contact their financial advisors or tax consultants for more details.
Tax information can be found at the Internal Revenue Service website www.irs.gov.