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Tax time and housing allowances

Active duty W-2 forms were posted last Friday on DFAS’ myPay Web site. Paying taxes is a civic responsibility we all share; filing is not an option.

There are two great programs that I encourage urge you to look into using. The first is the free e-file program offered through the IRS Web site. The Web site will walk you through whether you’re eligible for free e-filing and help you identify one of countless companies that offer the free service. 

Thirty-eight states have partnered with many of the e-file providers and the IRS; you may be able to file both Federal and state tax returns, for free, at the same time. The Web site is:{{PERIOD}} E-filing can provide you a refund in as little as 10 days, saves you a trip to the post office, and helps you through completing your forms.

The second program is VITA - Volunteer Income Tax Assistance. This group of volunteer tax preparers, overseen locally by the Navy Legal Service Office and Lt. Lauren Haley, JAGC, the regional VITA coordinator, are expertly trained, can help you properly prepare your return, and then electronically file. 

There are three VITA offices throughout Region. They can be reached by calling NBK Bangor at (360) 315-2642; NAS Whidbey Island at (360) 257-5952; and NB Everett at (425) 304-4754 for more information on using VITA and to set up an appointment. Again, you’ll usually receive refunds far more quickly than if you file by mail.

Let me warn you about the pitfalls of refund anticipation loans and the dangers of payday loans.  Both can have huge interest rates and stiff penalties for early repayment. 

One last note on taxes: if you do have a refund coming, consider investing it, putting it into your savings account, or even adding to your Thrift Savings Plan (TSP) account. Let your money work for you and your future.

I know there’s been a great deal of discussion regarding the 2007 Basic Allowance for Housing (BAH) rates. Some rates went up and others went down. What’s crucial to remember is that even if your pay grade’s rates decreased, if you were already stationed in the Northwest and receiving BAH at the 2006 level, you’ll continue to receive the higher 2006 BAH rate.

In short, your BAH is ‘grandfathered’. Newly reporting Sailors, however, will receive the rates in effect at the time they report.

Let me dispel a few myths about BAH. First, it doesn’t always cover all out-of-pocket expenses, and it isn’t designed to. BAH is paid based on the average housing cost within a roughly twenty-mile radius of your duty station zip code. A lower rent and/or lower utility cost will reduce out of pocket expenses. It’s your responsibility to research your housing costs and utility usage and then to choose to live within BAH. 

Secondly, BAH doesn’t account for family size which means greater equity for service members.  Third, BAH does not account for provision of commissary, exchange, or health care facilities.  Although those entitlements do affect cost of living, BAH is a housing allowance and is designed to offset housing costs, not availability or proximity of those services. 

Finally, BAH isn’t designed to address the different costs of owning a home and paying a mortgage. While many members use BAH to pay or offset their mortgage, home ownership isn’t taken into consideration when calculating BAH. 

The system reflects current rental market conditions at duty stations, rather than the complexity of mortgage loans, interest rates, and other economic costs related to home ownership.

Two great resources available to you are your admin/personnel office (whether onboard ship or on base at a local PSD) and the web site of the Per Diem, Travel and Transportation Allowance Committee. You can access that site at:{{PERIOD}}

Until next week, take care of each other and stay safe.

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