DOD official provides tax tips, investment advice for troops

| February 9, 2012 | 0 Comments

Lisa Daniel
American Forces Press Service

WASHINGTON — As service members begin preparing for the annual tax season, they may want to consider a new savings plan designed for young people, a Defense Department tax official said Feb. 3.

Service members and their family members who earn less income today than they expect to earn in the future, such as those in junior ranks who look forward to getting promoted to higher grades, should consider investing in the Thrift Savings Plan’s new Roth option, said Army Lt. Col. Evan Stone, director, Armed Forces Tax Council.

“The Roth TSP is a good option for service members who are paying less tax now than they expect to pay later,” Stone said, during an interview with the Pentagon Channel and American Forces Press Service.

The traditional TSP defers taxes on earned income until the money is withdrawn, Stone explained. The Roth option allows a member to contribute after-tax dollars that grow tax free and are not taxed upon withdrawal, he said.

Both plans allow a maximum annual contribution of $17,000, he said, up from $16,500 last year. Few other changes apply to service members and their family members this tax season, Stone said.

A new calculation for imminent danger pay does not change service members’ eligibility for income tax exclusions. The pay was changed from a flat $225 per month to an amount prorated per day.

Stone said there has been no change to federal income tax brackets in the past two years. They remain at 10, 15, 25, 28, 33 and 35 percent of taxable income, he said.

Still, Stone said, many people don’t realize that income is taxed on a progressive scale, so as a person’s income increases and they move into a higher tax bracket, only the new proportion of pay is taxed at the higher rate, not all of their income.

While few people enjoy writing a check to Uncle Sam, Stone also noted that the military is a good employer come tax time because military allowances, such as those for housing and meals, are not taxable.

“Military members have a tax advantage by having a chunk of their regular pay as tax-exempt income,” he said.

Stone said he wants to remind service members that they and their family members can get free tax preparation by IRS-trained volunteers at almost every military installation in the world.

“The military has an excellent program for tax preparation worldwide,” he said.

Deployed service members, he added, do not have to sign the tax forms if their spouse has power of attorney privileges.

Military OneSource

Military OneSource offers free tax-related phone consultations seven days a week, 7 a.m.-11 p.m., at (800)730-3802.

Hawaii Army Tax Center

The Hawaii Army Tax Center at Schofield Barracks is open to all ranks, family members and retirees for free assistance in organizing and completing 2011 income tax forms, on an appointment-only basis, 7 a.m.-4 p.m., Monday-Friday, through April 29, at Building 648, next to the Sgt. Smith Theater.

The Hawaii Army Tax Center at Fort Shafter is located in the Aloha Center, and its hours are 9 a.m.-3 p.m., Tuesdays and Thursdays.

Soldiers, family members and retirees can schedule their appointments for either location by calling 655-1040.

For a complete list of what tax documents to bring and updated wait times for walk-ins, visit: www.Facebook.com and search for “Hawaii Army Tax Centers.”

 

Tags:

Category: News

Leave a Reply

Your email address will not be published. Required fields are marked *