Are folks preparing their soldiers for an unexpected tax liability come April?

CPT Private RallyPoint Member — Thu, 10 Sep 2020 15:06:13 -0400

Professionally, I'm annoyed by what I understand the details to be of the tax deferment. I understand that taxes weren't lowered, and will still be payable in full come tax time. So, are employees aware now, they essentially are now obligated to stash that money away for payment in April. It would take the financial acumen of a Corporate Treasury professional to actually economically benefit from the tax deferment, invest those fund to earn an economic benefit, and then pay the tax bill due, and finally netting the investment return for the period of time the employee had the funds invested verses having made the payment per expected.

Economically, the action is inconsequential, and many folks usually planning their cash flows based on April tax refunds are now either going to get a much lower refund, or be broadsided with a tax due bill if they were not disciplined enough to not spend it, which I gather is the majority of typical consumers.

Response by SFC Private RallyPoint Member made Sep 10 at 2020 3:07 PM

SFC Private RallyPoint Member — Thu, 10 Sep 2020 15:07:46 -0400

I know in my unit, all the way from the Division down, we are being directed to counsel our Soldiers to put back the extra money and be prepared to pay it back at the end of the tax season. Personally I think it sucks to have a loan forced onto me.

Response by SFC Michael Hasbun made Sep 10 at 2020 3:10 PM

SFC Michael Hasbun — Thu, 10 Sep 2020 15:10:43 -0400

We are certainly doing or best to communicate all the salient parts to our people, and stress the importance of savings and responsibility.

Are there still going to be people in the military that spend the extra money on a keg of White Claw, a tiger cub and a hentai doll collection? Yeah, probably, but all we can do is our best...

https://www.dfas.mil/Portals/98/Documents/Military%20Members/Payroll_Fact_Sheet_Military_Payroll_V9.pdf?ver=2020-09-10-090255-440

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Response by SFC Kelly Fuerhoff made Sep 10 at 2020 3:25 PM

SFC Kelly Fuerhoff — Thu, 10 Sep 2020 15:25:46 -0400

There are always soldiers who don't listen to advice even when it's sound. Hopefully most will - but as stated below you'll always have those people who will just go spend the money.

Response by CW4 Guy Butler made Sep 10 at 2020 5:37 PM

CW4 Guy Butler — Thu, 10 Sep 2020 17:37:20 -0400

I’m thinking about the section of TurboTax that checks to see if Social Security was underpaid; that’s a potential tax liability right there since the tax year ends on 31 December. I’m looking at about a $2100 underpayment.

Response by SSG Private RallyPoint Member made Sep 11 at 2020 8:31 PM

SSG Private RallyPoint Member — Fri, 11 Sep 2020 20:31:12 -0400

I know I have conveyed to my Soldiers the importance of being financially responsible. This latest issue just makes it more difficult. I’ve spoken to other Squad Leaders and we agree that the 1st and 15th to review all of our Soldiers LES and reiterate what is happening and what it means. Especially the closer we get to the Holidays it’s important to emphasize restraint and hope Soldiers adhere to guidance on their finances. I don’t want to see my Soldiers request an AER loan unless it is necessary.

Response by SMSgt Private RallyPoint Member made Sep 14 at 2020 9:38 AM

SMSgt Private RallyPoint Member — Mon, 14 Sep 2020 09:38:20 -0400

The way this is supposed to work is that the employee portion of the social security taxes (6.2%) will not be withheld from the employee through the end of the year. Then, from January 1 - April 15, 2021, the employer will withhold those amounts, ratably, from the employees' paychecks. So employees will see larger checks through the end of the year and small checks for the first 3.5 months of next year. There is a chance the deferral will be forgiven as President Trump has stated he will push congress for forgiveness. But everyone needs to make sure they budget for the smaller checks in the first quarter of next year.

Response by SFC Don Lawrence made Sep 15 at 2020 2:40 PM

SFC Don Lawrence — Tue, 15 Sep 2020 14:40:46 -0400

I doubt very few will take any action to prevent the problem not matter how often they are told to take action. Not just the military either. They will cry in April and blame someone else for not telling or making them take action. I have seen it time and again over my 61 years.