U.S. Army Human Resources Command “Soldiers First” //UNCLASSIFIED// PED LEVEL 2 1POC: Military Pay Instructors

Federal Taxes

U.S. Army Human Resources Command “Soldiers First” //UNCLASSIFIED// PED LEVEL 2 2POC: Military Pay Instructors

Describe types of tax withholdings

Outline eligibility requirements for tax deductions

Describe wages not subject to withholding

Federal Insurance Contributions Act

Combat Zone Tax Exclusion (CZTE)

Benefits of MyPay

Lesson Objectives

U.S. Army Human Resources Command “Soldiers First” //UNCLASSIFIED// PED LEVEL 2 3POC: Military Pay Instructors

Types of Withholdings

Federal Income Tax Withholding (FITW)

State Income Tax Withholding (SITW)

Factors for Income Tax Withholdings

Income Marital status Exemptions Additional amount withheld

FITW calculation methods

Wage bracket Percentage (manual computation)

Withholdings

U.S. Army Human Resources Command “Soldiers First” //UNCLASSIFIED// PED LEVEL 2 4POC: Military Pay Instructors

DoDFMR Vol 7A 4402

All pays and some fringe benefits

Exclusions

Combat Zone Tax Exclusion Legal residents of Puerto Rico and Commonwealth of

Northern Mariana Islands

Internal Revenue Service Publication 15, Circular E (Employer's Tax Guide)

Taxable amounts

U.S. Army Human Resources Command “Soldiers First” //UNCLASSIFIED// PED LEVEL 2 5POC: Military Pay Instructors

• CY 2020 6.2%

• Base limit $137,700

Social Security

• CY 2020 1.45%

• No cap on deductionsMedicare

Federal Insurance Contributions Act (FICA) Taxes

U.S. Army Human Resources Command “Soldiers First” //UNCLASSIFIED// PED LEVEL 2 6POC: Military Pay Instructors

Service in a combat zone or qualified area

(illness/wounds, captured by enemy, missing, leave)

All enlisted member and warrant officers pay

Officers: highest enlisted pay (based on SMA) plus

HFP/IDP ($225)

In direct support of CZTE operations

Area must be designated (land, sea, air)

Tax exclusion does not apply when in CZTE area for mere

convenience (leave)

Combat Zone Tax Exclusion (CZTE)

U.S. Army Human Resources Command “Soldiers First” //UNCLASSIFIED// PED LEVEL 2 7POC: Military Pay Instructors

DoDFMR Vol 7A 440202A2

Step 1 Identify taxable pay

Basic pay, HFP, IDP, FLPP, etc.

Step 2 Add IDP/HFP to SMA basic pay

$225 + $8,578.50 (FY19) = $8,803.50

Step 3 Subtract Step 2 from Step 1

Calculating CZTE

U.S. Army Human Resources Command “Soldiers First” //UNCLASSIFIED// PED LEVEL 2 8POC: Military Pay Instructors

8COL Wayne with 16 years of service was in Afghanistan

February 2019 receiving IDP and HDP-L.

What amount of the pay was taxable?

Step 1 Find Taxable Pay

Step 2 Add IDP / HFP to SMA Basic Pay

Step 3 Subtract Step 2 from Step 1

$9,586.80 (BP) + $100 (HDP-L) = $9,911.80+ $225 (IDP)

Calculating CZTE Cont.

= $8,803.50

- $8,803.50$9,911.80 = $1,108.30

$225 + $8,578.50

U.S. Army Human Resources Command “Soldiers First” //UNCLASSIFIED// PED LEVEL 2 9POC: Military Pay Instructors

LTC Banner has 18 years of service. In January 2019 he

was in Afghanistan receiving IDP and HDP-L.

What amount of the pay was taxable?

Step 1 Find Taxable Pay

Step 2 Add IDP / HFP to SMA Basic Pay

Step 3 Subtract Step 2 from Step 1

$8,998.50 (BP) + $100 (HDP-L) = $9,323.50+ $225 (IDP)

Calculating CZTE Cont.

- $8803.50 $9,323.50 = $520.00

= $8,803.50$225 + $8,578.50

U.S. Army Human Resources Command “Soldiers First” //UNCLASSIFIED// PED LEVEL 2 10POC: Military Pay Instructors

DoDFMR Vol 7A 350202A2

Leave accrued in a combat zone or qualified hazardous duty area

One day in an eligible location qualifies all leave in that month to be CZTE leave

CZTE leave days will be tax-exempt when used or sold

First leave used

CZTE Leave

U.S. Army Human Resources Command “Soldiers First” //UNCLASSIFIED// PED LEVEL 2 11POC: Military Pay Instructors

Allows members to

Modify tax withholdings

Adjust TSP contributions

Access to Leave and Earnings Statements (LES)

View Tax statements (W-2)

MyPay

U.S. Army Human Resources Command “Soldiers First” //UNCLASSIFIED// PED LEVEL 2 12POC: Military Pay Instructors

Check on Learning

1. The Chapter of the DODFMR that covers Income

Tax Withholding is? ____

2. The highest amount of CZTE pay an Army officer

can be granted is up to the ______ pay, plus HFP/IDP.

3. ______ is the system that a Soldier would use to

get an electronic W-2.

U.S. Army Human Resources Command “Soldiers First” //UNCLASSIFIED// PED LEVEL 2 13POC: Military Pay Instructors

Questions…

Comments…

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