TAXES ON YOUR PAY You  must  pay  federal  income  tax  on  your  Navy pay. The   amount   deducted   depends   upon   the withholding  statement  (W-4)  you  file  with  your disbursing officer.   You must pay federal income tax on  (1)  basic  pay,  (2)  incentive  and  special  pay,  (3) certain  travel  pay,  and  (4)  other  pay  as  applicable. You do not pay tax on allowances such as subsistence and allowance for quarters. Military   personnel   come   under   the   Federal Insurance Contributions Act (FICA), which provides Social  Security  coverage  for  members  of  the  armed forces.   FICA taxes are deducted from your monthly pay and are currently limited to a specified maximum during a calendar year. You  may  also  have  to  pay  a  state  income  tax  to your  state  of  record.    When  you  enter  the  Navy  on active duty, you fill out a DD Form 2058 to designate your  state  of  legal  residence.    Some  states  do  not require active-duty citizens to pay a state income tax, and  some  states  do  not  have  any  state  income  tax. Check  with  your  disbursing  officer  for  additional information. PAYDAY Payday  takes  place  twice  each  month  on  dates established by your commanding officer, normally the 1st  and  15th  of  each  month.     The  Department  of Defense has mandated that all service members elect a  financial  institution  to  have  their  net  pay  directly deposited.  This election must be accomplished within 6 months after your entry into active duty. Since you will probably have to pay many of your bills  by  mail,  having  a  checking  account  will  be  a necessity.  Most naval personnel have the opportunity to  join  a  Navy  or  Defense  Credit  Union,  which  will provide  them  the  opportunity  to  open  a  checking account.     Financial  Institutions  often  have  branch offices   conveniently   located   near   most   large installations. Remember,   you   can   have   your   net   pay automatically  deposited  into  your  checking  account through  the  Direct  Deposit  System.   Allotments  can also  be  paid  to  an  account  at  a  financial  institution. This  Direct  Deposit  System  (DDS)  is  in  addition  to the  Navy  allotment  system.     If  you  change  duty stations, your direct deposit will continue while you are on leave or in a travel status.   If you are in transit or  have  temporary  duty  before  the  DDS  starts,  you can be paid by any military disbursing officer of the Department  of  Defense  or  the  Coast  Guard.     To receive  pay,  you  must  present  your  pay  record, identification card, and original orders. Do not carry large sums of cash on your person. Since your profession requires that you travel in many parts  of  the  world,  acquire  the  habit  of  carrying traveler’s checks rather than cash.   You can purchase traveler’s  checks  from  any  bank  or  credit  union.   If your checks are lost or stolen, you can obtain refunds quickly, but you have little hope of ever getting back any lost or stolen cash.   Never leave cash unattended in  your  stateroom  or  bachelor  officers’  quarters (BOQ).   Remember, you are not the only one with a key to your room. ALLOTMENTS Allotments  of  pay  are  important,  useful,  and convenient.  Your disbursing officer will help you fill out the necessary allotment forms. DFAS-CL  will  pay  the  amount  of  the  allotment each month to whomever you designate.   Allotments are  normally  designated  for  dependents,  insurance, savings accounts, checking accounts, and government savings bonds.   The  Department of Defense Military Pay and Allowances Entitlements Manual  (DODPM) outlines  other  types  of  allotments.     Allotments normally reach the intended person or agency by the 5th  of  the  month,  if  the  person  or  agency  is  located within the continental United States (CONUS).  Once an  allotment  is  started,  it  must  remain  active  for  at least 3 months. Changes  to  allotments  require  planning.    If  you are  on  board  a  ship  and  want  to  start  an  allotment, ensure   the   disbursing   officer   has   the   appropriate documentation  no  later  than  the  17th  of  the  month preceding the month in which you wish the allotment to  start.     Members  serviced  by  a  PSD  have  a  little more time; the deadline is the 28th of the preceding month. One  extra  note:    If  you  should  learn  in  advance that  you  will  be  reporting  to  a  deployed  ship,  you would be wise to consult a disbursing officer (before reporting  aboard)  about  requesting  an  allotment  for your dependents.   An allotment will ensure they have an income while you are away. 4-7