Former Spouse Military Retirement Pay Taxes


Is The Former Spouse Entitled To A Portion Of The Military Spouse’s Pension

Can Your Spouse Claim Military Retirement Benefits in a Divorce? | Contested Military Divorce

Yes. The Uniformed Services Former Spouse Protection Act permits state courts to apply the family law principles of their particular state when deciding how to divide military pensions in divorce. the full text of the USFSPA. Under the USFSPA, state divorce courts can award a military pension to the service member or divide it between the spouses. If the pension is awarded entirely to the service member, courts may compensate the spouse for his or her share of the military pension from other marital assets.

Taxes And Military Pensions: Good Guidance Needed

Divorcing military personnel cannot expect the necessary guidance from most lawyers. Few of them know enough about the tax consequences of periodic payments from the former employee to the alternate payee in regard to the division of a deferred compensation program. One premier family law attorney, when asked why shed told her client there were no taxes due for the receipt of monthly pension-share payments from a Navy retiree, replied, Because the payments are part of property division, not alimony, and everyone knows that property division payments are not taxed under Section 1041 of the Internal Revenue Code. It is, of course, true that property transfers between spouses under 26 U.S.C. 1041 are not subject to capital gains taxes, but this has no relationship to the issue at hand, which is pension-share payments from a military retiree to a former spouse.

In a 2011 decision, the Kentucky Court of Appeals affirmed a trial-level order which required the retiree to withhold from the retirement benefits otherwise payable to a sum sufficient to pay all taxes imposed on for that portion of his retirement .

Is Survivors Benefits For Retired Military Spouse

Is survivors benefits for retired military spouse? The Survivor Benefit Plan provides financial support to military spouses and/or children when a military member dies while on duty or after retirement. SBP provides eligible beneficiaries with a monthly payment known as an annuity. The amount of the SBP benefit is a percentage of retired pay.

Does retired military spouse benefits after death? The Survivor Benefit Plan allows a retiree to ensure, after death, a continuous lifetime annuity for their dependents. The annuity which is based on a percentage of retired pay is called SBP and is paid to an eligible beneficiary. It pays your eligible survivors an inflation-adjusted monthly income.

How much does a surviving spouse get from military retirement? The SBP annuity is determined by the base amount you elect. The base amount may range from a minimum of $300 up to a maximum of full retired pay. The annuity is 55 percent of the base amount.

What benefits do retired military spouses get? As the spouse of a military retiree, you may be eligible for: VA Education Benefits: Learn to use your GI Bill. VA Pension: Whether you have a Medal of Honor pension, survivors or veterans pension, understand what youre entitled to and how to utilize it.

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The Uniformed Services Former Spouse Protection Act

The Uniformed Services Former Spouse Protection Act is a federal law that provides certain benefits to former spouses of military members. An un-remarried former spouse may receive medical, commissary, exchange and theater privileges under the Morale, Welfare and Recreation program if he or she meets the requirements of what is known as the 20/20/20 rule:

  • The former spouse was married to the military member for at least 20 years at the time of the divorce, dissolution or annulment.
  • The military member has performed at least 20 years of service that is creditable in determining eligibility for retired pay .
  • The former spouse was married to the member during at least 20 years of the members retirement-creditable service.

Former spouses may be entitled to TRICARE medical coverage if he or she meets certain requirements:

  • The service member performed at least 20 years of creditable service.
  • The marriage lasted at least 20 years.
  • The period of the marriage overlapped the period of service by at least 15 years.

Under the 20/20/15 rule, the former spouse does not have access to the military exchange, installation privileges or commissary privileges.

Can A Former Spouse Receive Military Retirement Pay

Top Ten Tips for Getting the Biggest Tax Refund

If the former spouse of a military service member is awarded a share of the ex-spouses military retirement pay, the service member served for at least 10 years, and the former spouse was married to the service member for at least 10 years that overlapped the service members military service, the ex-spouse can receive direct payments from the

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New Law Beginning Tax Year 2022

Beginning with tax year 2022, 100% of military retirement pay will be excluded from Nebraska taxable income . No formal election will be required, and you will no longer be limited by an election filed under the previous law.

To learn more about Nebraskas taxation of military retirement pay, contact Russ Smith at Lutz at .



Russ Smith is a Tax & Consulting Director at Lutz with over 20 years of state tax experience. He specializes in state income tax planning and compliance and helps clients minimize state and local taxes through the use of incentives.

  • State and Local Tax
  • American Institute of Certified Public Accountants, Member
  • Nebraska Society of Certified Public Accountants, Member
  • Certified Public Accountant
  • BSBA, University of Nebraska, Kearney, NE
  • Graduate Studies, University of Nebraska, Lincoln, NE
  • Douglas County Historical Society, Board Member
  • Douglas County Historical Society Foundation, Board Member

Collection Of Child Support And Alimony

The Maine Department of Health and Human Services usually handles child support and spousal support collection. When a court makes a Divorce or Unmarried Parental Rights order it will provide the forms for DHHS to collect the child support and any spousal support. Letting DHHS handle this is often best. DHHS can collect from a military pension, from a current employer, from bank accounts and from tax returns. DHHS can collect both current and past due support owed. No other action by the person owed the support is needed. You can learn more about DHHS child support collection here.The only time that DHHS will not help with collection is when there is no child support order. DHHS cannot help if there is only a spousal support order. If you want to collect spousal support directly from your spouse or ex-spouse’s military retirement you need to file a claim with the Defense Finance and Accounting Service . You can collect current and past due child support from DFAS. But, you can only collect current spousal support this way. Past due spousal support cannot be collected from DFAS. The instructions for doing this can be found at the Defense Finance and Accounting Service’s website.

Note: This process can be very complicated. You should consult with a lawyer if you can.

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Implementation Of The Existing Law And Related Measures

Implementation of the provisions of the USFSPA has often been confusing and frustrating for those involved. Uneven implementation of the law, especially with respect to the direct pay provisions, and the changing definition of disposable pay as the basis for division of retired pay have been contributing factors. In addition, changes to other laws affecting the treatment of military retired pay with respect to other forms of compensation have also complicated the implementation USFSPA.

In 1984, the U.S. General Accounting Office published a report that examined the implementation of the USFSPA.25 The GAO also noted that many of the early implementation problems were related to inconsistent language used in court-ordered settlements. Over the years, changes to the law and actions by the courts have overcome many of these problems.

Exspouse And Military Retirement Pay

It’s open season for Survivor Benefit Program (SBP) coverage for former spouses

Your share of your ex-husband’s military retirement is considered alimony, deductible by him and reportable by you.

If DFAS pays you directly and sends you a Form 1099-R, you report that amount on your tax return .

If he pays you directly, report it under Alimony Received interview, under Less Common Income.

In 2008, the Tax Court recently ruled that a taxpayers payments to an ex-spouse under the Uniform Services Former Spouse Protection Act representing her share of his military retirement pay were deductible alimony payments. – See more at:

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What Happens To Your Military Pension After A Divorce

Following that ruling, Congress passed the Uniformed Services Former Spouses Protection Act, or USFSPA, which allows state courts to divide military retirement pay in a divorce, similar to a private pension. The law also makes it easier for an ex-spouse to collect child support and alimony payments from a retired service member.

Community Property Fraction Of Military Retired Pay

To determine the community property portion of military retired pay, take the marital pension service and divide it by the total pension service as of the divorce date. Multiply the disposable retired pay by this community fraction. The result is the marital portion of disposable retired pay to be divided equally between the spouses.

Although the divisible marital portion of the military pension is determined as a fraction, thats not the only option for the order. The parties could set the former spouses share as a fixed dollar amount, percentage, formula, or hypothetical with contrived rank with manufactured years of service.

Generally, with divorces filed in Arizona, for example, the accumulation of months of marital pension service stops on the date the case commences. That is when the petition for dissolution of marriage is filed and served on the other spouse if it results in dissolution of marriage. ARS § 25-211. Recall, too, that with pensions for those in the National Guard and Reserve, the community fraction is determined using retirement points, not months of service.

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North Carolina Military Retirees To See State Tax Break

Starting Jan. 1, military retirees who settle in North Carolina will no longer be subject to state taxes on their pensions.

The North Carolina General Assembly approved eliminating the state’s tax on military pension income in the fiscal budget that was signed into law by Gov. Roy Cooper in November.

Cumberland County’s delegation of lawmakers sponsored and cosponsored bills to champion the effort.

They are Republicans, Reps. John Szoka and Diane Wheatley, and Democrats, Reps. Marvin Lucas and Billy Richardson, and Sens. Ben Clark and Kirk deViere.

Clark, a retired Air Force officer, filed a Senate bill in January that supported the initiative, which was backed by Army veteran deViere, who was a cosponsor.

Szoka, a retired Army officer, and Wheatley filed the House version of the bill in February that passed a third reading in the house in June.

The only military pensions that have been exempt in North Carolina were those for veterans with five years of service before August 1989.

Under the new law that goes into effect Jan 1., the exemption applies to retirees who have served in the armed forces for at least 20 years or those who medically retired or survivors of one of those veterans.

“It’s recognizing the service to country that keeps us all safe, and it’s a small way to honor service of veterans and to let them know that we are truly the most military-friendly state in the union,” Szoka said during a news conference earlier this month.

Take The Practice Of Military Divorce Seriously

Taxable Income From Retired Pay

Every divorce attorney who represents military families should be dedicated to staying abreast of changes in the law. Regularly review new cases and statutes examine changes to federal, state, and local rules of court analyze judicial interpretations of state and federal legislation, and study applicable military rules and regulations. You will want to closely follow legal trends that could potentially impact your clients cases. In law practice, we routinely examine the learned publications of our peers. In this, special recognition goes to North Carolina attorney Mark E. Sullivan, former Army JAG colonel and author of The Military Divorce Handbook , for his substantial contribution to this area of practice.

Scott David Stewart is the founder of Stewart Law Group with offices throughout Arizona. He is a family law and military divorce attorney who has helped many clients navigate the legal complexities of divorce, child custody, spousal support, property division, parental visitation, and child relocation disputes.

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Ask About The Pension

If you’re the spouse of a service member and you’re considering a divorce, you need to understand that you should address the military pension during the divorce proceeding not once it’s over. This is true even if retirement seems like a long way off. Ultimately, if you want to receive some portion of your spouse’s retired pay, you should get a court order that divides the military pension.

If you forget to address the military pension during the divorce, or fail to get the appropriate court order, it may not be possible to divide the pension once the divorce is final. If this has happened to you, there may still be a remedy available such as a motion to divide omitted assets. However, these motions can be costly and complicated. Be sure to contact an attorney if you find yourself in this situation.

So, what should you do now? Ask your spouse about the pension and its value. Get as much information as you can. Figure out, as early as possible, how to collect your fair share of retired pay. If the military spouse isn’t willing to share information, you’ll need to hire an attorney who can help you get started.

Retirement Status At Time Of Divorce

The frozen benefit division rule is used to determine the military pensions value prior to its division in the divorce. Furthermore, the rule only applies to military spouses not yet receiving retired pay.

Is the service member already receiving retired pay from the military at the time of the divorce?

  • Rule Does Not Apply: If the service member is retired and receiving retired pay at the time of divorce, then the frozen benefit division rule does not apply to the division of his or her military pension.
  • Rule Does Apply: If the military spouse is actively serving and is not receiving retired pay at the time of divorce, then the frozen benefit division rule must be applied.

What follows is a breakdown of how the frozen benefit division rule typically works in the military divorce of an active-duty spouse.

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What Is The 10 10 Rule In Military Divorce

Here is a brief description of the 10/10 rule: If the marriage lasted 10 years and the service member or former service member served at least 10 years in the military during that marriage, then the former spouse shall receive those pension benefits from the Defense Finance and Accounting Service .

Can A Reservist Be A Veteran After Leaving The Army

Can Your Spouse Claim Military Retirement Benefits In a Divorce? | New Beginnings Family Law

After leaving the service with an honorable discharge, Ross is not considered a veteran since he was called for state duty, not federal duty. Beth served in the Army Reserves for four years. She was called to active duty to assist with the War on Terror. When she retired, she was discharged dishonorably.

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Military Retirement And State Income Tax

Some states don’t charge income tax on military retired pay. In all states, VA & Social Security disability payments are tax-free.

If you have issues with retired pay and state income tax, including changing your withholding amount, you can always contact DFAS for assistance.

You can contact DFAS at:

Defense Finance and Accounting Service
US Military Retirement Pay
Phone: 800-321-1080

What Counts As Creditable Service For 10/10 Rule

For active duty members, creditable service is also known as 1405 service – it includes the years of service for which the member was eligible to receive active duty pay. 10 U.S. Code § 1405. Additionally, a member who has reserve retirement points but qualifies for an active duty retirement can receive day-for-point credit for such points.

Creditable service excludes time in AWOL status, time incarcerated, or time lost due to an injury caused by the member’s misconduct. 10 U.S. Code § 972.

For reservist, a creditable year is is any year in which the member accrued at least 50 points. 10 U.S. Code § 12732. Simplistically, reservists get 15 points annually for being in the reserves, plus 1 point per day of actual service.

Moreover, if a spouse is married for at least 10 years overlapping military duty, it doesn’t matter if those 10 years are all active, all reserve, or a combination of both.

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Recent Changes To The Military Retirement System

Currently, qualified military members receive a defined pension from the time of retirement until death. Servicemembers may also make contributions to individual retirement accounts through the Thrift Savings Plan or through other private retirement accounts.45 Recent changes to the military retirement system that will go into effect on January 1, 2018, authorize government matching contributions to the TSP up to a certain percentage of basic pay.46 In addition, for those entering the service on or after January 1, 2018, their defined annuity will be calculated at a reduced multiplier.47 The reduction in the multiplier for the defined annuity does not change the USFSPA provision allowing the court to award up to 50% of retired pay to a former spouse. Servicemembers under this new blended retirement system will still receive a defined benefit once eligible for retired pay, and will be vested in government contributions to their TSP accounts after two complete years of service. Vesting for the defined benefit remains 20 years of eligible service for a regular retirement.

Those servicemembers who opt into the new blended retirement system or enter service on or after January 1, 2018, will also be eligible to receive a minimum amount of continuation pay between 8 to 12 years of service. This could be paid to the member in a lump sum or in four installments. This payment could be considered to be divisible upon the dissolution of a marriage.49

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