Air Force VSP tax question
10-14-2006, 06:00 AM
#1
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Joined APC: Apr 2006
Position: XL/XLS, FO
Posts: 199
Air Force VSP tax question
Does anyone have suggestions for perhaps avoiding having to give back the 25% in taxes that the Air Force is giving us to get out? I need to find a way to save that chunk of $$. Perhaps having my account that it's going to be placed in be overseas? Help please!
10-18-2006, 05:24 PM
#4
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Joined APC: Mar 2006
Posts: 215
25% withholding
I don't know of a way to get around the 25% mandatory withholding; but you can adjust your exemptions on your W-4 to basically zero out the tax taken out of your future pay.
I just recieved a bonus payout and they took the 25% of my pay. I expect to get most if not all the tax they withheld back when I file 2006 taxes.
Get a tax program like Turbo-Tax and see what number of exemptions will work for you.
Presently I'm unemployed, so increasing my W-4 exemptions will not help a whole lot.
I just recieved a bonus payout and they took the 25% of my pay. I expect to get most if not all the tax they withheld back when I file 2006 taxes.
Get a tax program like Turbo-Tax and see what number of exemptions will work for you.
Presently I'm unemployed, so increasing my W-4 exemptions will not help a whole lot.
10-24-2006, 07:06 AM
#5
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Joined APC: Oct 2006
Position: 737 FO
Posts: 105
There's no way around the upfront withholding seeing as how it's Uncle Sam that's paying you, they get their cut first. The VSP is large enough that at least a portion of it is automatically going to be in the 28% tax bracket or worse. However, I like the idea of changing your withholdings to eliminate any taxes being taken out month to month. The only other thing I can foresee is maxing out TSP and IRA throughout the year. Too bad we can't contribute VSP to the TSP.
10-24-2006, 03:22 PM
#6
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Joined APC: Jul 2005
Posts: 2,242
Originally Posted by Texandrvr
There's no way around the upfront withholding seeing as how it's Uncle Sam that's paying you, they get their cut first. The VSP is large enough that at least a portion of it is automatically going to be in the 28% tax bracket or worse. However, I like the idea of changing your withholdings to eliminate any taxes being taken out month to month. The only other thing I can foresee is maxing out TSP and IRA throughout the year. Too bad we can't contribute VSP to the TSP.
Max out the TSP!!! Even without the match the L-funds are a good deal and you can either let it ride till you're 59 1/2 or older or transfer into another 401 type plan with your next employer.
If you can afford to max out the ROTH IRA, if you qualify due to income. If not, then out the money into a traditional IRA. Over the long term the ROTH will provide more $$$ since it grows tax free. Remember you have to pay tax on the traditional IRA.
V/r,
LAFF
10-24-2006, 04:44 PM
#7
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Joined APC: Apr 2006
Position: XL/XLS, FO
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I am planning on adding to my ROTH and Education IRAs, but I thought that there was a limit per year of tax-free contributions ($2000?). Tht won't do much as far as minimizing taxable income come Apr 15.
74plb, How do you figure getting the 25% back when you file? I don't think you'll get it all back. if so, what's the point of taking it to begin with?
I'm going to try to move the Separation date to the end of the month and hope for a quick trip to the AOR. That's the only way I can think of saving it.
74plb, How do you figure getting the 25% back when you file? I don't think you'll get it all back. if so, what's the point of taking it to begin with?
I'm going to try to move the Separation date to the end of the month and hope for a quick trip to the AOR. That's the only way I can think of saving it.
10-24-2006, 07:44 PM
#8
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Joined APC: Mar 2006
Posts: 215
25% tax
I have a mortage, two kids, a house and a rental that throws off some pretty good deductions.
With my work deductions, rental expenses, depreciation etc. my marginal tax rate is only about 6%. So thats how I will get most of it back in the form of a tax refund. I was just forced to lend it to the Government just like you!
I paid more in tax on my *bonus* than I did for the first 8.5 months of the year.
Hope that made sense, it's time for bed.... As far as why I took my bonus, I was terminated and really had no choice in the matter. They had to settle up with me and that included paying out the bonus and forced withholding.
With my work deductions, rental expenses, depreciation etc. my marginal tax rate is only about 6%. So thats how I will get most of it back in the form of a tax refund. I was just forced to lend it to the Government just like you!
I paid more in tax on my *bonus* than I did for the first 8.5 months of the year.
Hope that made sense, it's time for bed.... As far as why I took my bonus, I was terminated and really had no choice in the matter. They had to settle up with me and that included paying out the bonus and forced withholding.
Last edited by 74plb; 10-24-2006 at 07:48 PM. Reason: clarification
11-02-2006, 05:05 PM
#9
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Joined APC: Oct 2006
Position: 737 FO
Posts: 105
Originally Posted by Pilot_135
I'm going to try to move the Separation date to the end of the month and hope for a quick trip to the AOR. That's the only way I can think of saving it.
Don't bother. Officers cannot get any part of any bonus tax free by going to the AOR. Besides, once approved for VSP we can't change our DOS. You might be able to fight that if you have a good reason. Medical reasons for you or a family member is the most common reason.
11-03-2006, 09:02 AM
#10
On Reserve
Joined APC: Aug 2006
Position: Awaiting training
Posts: 14
You can get the DOS changed. I know of 2 guys at CBM that got it moved up 6 months (both are on terminal leave right now). Go the the MPF and you will have to change the dates on the original application form and submit a letter of justification. I think the guys here used the argument that they already had reserve/guard jobs lined up and that it would save the AF the VSP money as well as pay/benefits.
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