We are going to switch gears and look at the military retiree statement, the Retiree Account Statement or RAS. This is the report of pension received by a military retiree. Several tax related items of interest here. Unlike the LES, the dates are a little funky on the RAS, and this is important for determining taxable income and deductions. The “statement effective date” is always the month before the date the income or deduction is actually taken. There is now a new box of this statement that shows the date that the changes on the RAS will take effect marked “New Pay Date As Of”, which makes things easier. Defense Financial Aid Services (DFAS) and Veterans Administration people use this as a standard dating system. Example: The effective date of 1 September does not actually kick in until 1 October.
Here’s something that may gain you a client for life – especially one who retired in the last 5 years or so – taking notice in the Pay Item Description section of the RAS if there is any VA offset. If there is, chances are he is still in position to amend prior year returns for any back-dated award. You should be asking every single military retiree or veteran if they have any kind of awarded VA or military disability income. If the answer is yes, it should lead you to a discussion about the tax implications of that award.
For a detailed narrative on the ways to handle a disability award for a military member please see my article on this subject here.
Tomorrow we will finish up our series with a look at some miscellaneous items on the RAS that can help you help your clients.