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…
Concerns…