Money Matters after Reintegration

1. Money Matters after Reintegration Forward Money Matters after Reintegration

2. Where Do I Start? • Evaluate“Where do I stand?” • Anticipate “How will my pay adjust now that I am home?” • Communicate “What are our Goals?” • Budget “How can we get there?” Forward Back Money Matters after Reintegration

3. Evaluate • Review all accounts and statements • Bank accounts (checking, etc.) • Savings • Investments • Retirement • Installment Loans (car, furniture, etc.) • Credit Cards • Other debt Forward Back Money Matters after Reintegration

4. Loss of Pay: Income is now TAXED HOSTILE FIRE PAY HARDSHIP DUTY PAY FAMILY SEPERATION ALLOWANCE (FSA) Monthly Dollar Amount - $100.00 - $400.00 (This amount varies per individual) - $225.00 - $100.00 - $250.00 Anticipate Forward Back Money Matters after Reintegration

5. Communicate • Communicate your GOALS to your spouse • Establish your Goals in writing • Short term (1 year or less; car or vacation) • Long term (1 year or more; home or retirement) • Avoid “surprises” later • Avoid Unmanageable Debt • Financial stress is #1 cause of marital problems! Forward Back Money Matters after Reintegration

6. DREAM SHEET • Click here to print out the worksheet Start by writing down your goal ideas for near‑term things you want to do, and then your longer‑term ideas. Your goals will change over the years, which is fine ‑ we all change. Think of this as a list for YOU to plan with, and your "future self” to check back with and see how you're doing. Forward Back Money Matters after Reintegration

7. Why Budget? • Budget will help you meet your NEEDS • NEEDS first, not WANTS • Food • Shelter • Clothing • Transportation • Savings • WANTS are • Stereo • New car • Entertainment, etc. Forward Back Money Matters after Reintegration

8. Why Budget Continued… • Prepare for Emergencies • Avoid financial harassment • Meet your Goals • Reduce financial stress • Protect family’s future • Protect your Career Forward Back Money Matters after Reintegration

9. Steps to Successful Budgeting • Total Income • Total Expenses • Match Your Goals • Implementing the Budget Plan Forward Back Money Matters after Reintegration

10. Step 1: Total Income • Salary / Wages • Take home pay • Estimate your pay now after Reintegration • Other Sources • WIC • Child Support or alimony Forward Back Money Matters after Reintegration

11. Step 2: Total Expenses • Review past bills, receipts and canceled checks • Includes: • Food • Clothing • Phone • Insurance • Credit cards • Installment Loans • Alimony or child support, etc. Forward Back Money Matters after Reintegration

12. Step 3: Match Your Goals and expenses with your income • Arrive at a reasonable dollar amount for spending limits and savings • If your Income isn’t large enough, need to make necessary adjustments. • Your Financial Readiness Program can help you. • Suggest ways to save you money • Work with Creditors on reducing the interest rate or proposing a new payment plan. Forward Back Money Matters after Reintegration

13. Income and Expenses • Click here to print out the worksheet Forward Back Money Matters after Reintegration

14. Implement your Budget • Be flexible • Be realistic • Involve the whole family • Use credit wisely • Shop carefully • Pay bills on time and be organized Forward Back Money Matters after Reintegration

15. Implementing Continued… • Most importantly… • Remember to COMMUNICATE with your spouse on your goals • ConsistentlyMONITOR and revise • Set Dollar limits on spending • Give yourself an “Allowance” • Set weekly meetings to review budget Forward Back Money Matters after Reintegration

16. CASH FLOW CALENDAR • MonthEstimated IncomeEstimated ExpensesSurplus/NegativeCumulative • Surplus/Negative • January ______________ ________________ ______________ ______________ • February ______________ ________________ ______________ ______________ • March ______________ ________________ ______________ ______________ • April ______________ ________________ ______________ ______________ • May ______________ ________________ ______________ ______________ • June ______________ ________________ ______________ ______________ • July ______________ ________________ ______________ ______________ • August ______________ ________________ ______________ ______________ • September ______________ ________________ ______________ ______________ • October ______________ ______________________________ ______________ • November ______________ ________________ ______________ ______________ • December ______________ ________________ ______________ ______________ • One excellent way to help you prepare for those high expense months is to use a simple cash‑flow calendar like this. You enter your estimated income and expenses for each month in the first two columns, then subtract to see whether you're going to go over your income. This will show you when expenses are expected to be higher, so you can anticipate them. • Click here for a printable version • In the right column you keep a running cumulative account of the surplus or negative amount. If it's negative, that is how much you'll need to take from your revolving savings. To make your revolving savings useful, it must start out with enough funds to keep you "above water" in those high expense months. You'll need to budget sufficient amounts for this account, which may mean rethinking your savings. Forward Back Money Matters after Reintegration

17. Remember, All Soldiers will receive $3.50 per day while in Iraq. This will be paid at your home station upon return from deployment as part of your travel settlement. • One time occurrence, spend it wisely! • Pay off high interest debt (credit cards) • Build up a savings for emergencies Forward Back Money Matters after Reintegration

18. 2004 Federal Income Tax • Soldiers have 180 days after redeployment to file federal income taxes. • Includes spouse and dependant children • Extension also goes for making a qualified IRA contribution See Publication 3, Armed Forces Tax Guide, for more details. Forward Back Money Matters after Reintegration

19. CHANGES TO TAX LAW FOR TAX YEAR 2004 Forward Back Money Matters after Reintegration

20. NUMBERS TO KNOW • EARNED INCOME CREDIT LIMITS: • $30,338 [$31,338 MFJ] -- 1 QUALIFYING CHILD • $34,458 [$35,458 MFJ] -- 2 OR MORE CHILDREN • $11,490 [$12,490 MFJ] -- NO QUALIFYING CHILD • MILEAGE ALLOWANCE: • BUSINESS 37.5 CENTS/MILE • CHARITABLE 14CENTS/MILE • MEDICAL 14 CENTS/MILE • MOVING 14 CENTS/MILE Forward Back Money Matters after Reintegration

21. TAX CREDITS • CHILD & DEPENDENT CARE CREDIT • FOREIGN TAX CREDIT • EARNED INCOME CREDIT • CHILD TAX CREDIT • ADDITIONAL CHILD TAX CREDIT • ADOPTION CREDIT • HOPE SCHOLARSHIP CREDIT • LIFETIME LEARNING CREDIT • RETIREMENT SAVINGS CONTRIBUTIONS CREDIT Forward Back Money Matters after Reintegration

22. EARNED INCOME CREDIT • CHANGED IN TY 2002! • NO LONGER REQUIRED TO ADD NONTAXABLE INCOME TO AGI • A LOT MORE MILITARY TAXPAYERS QUALIFY • CAN BE AS MUCH AS $4,300! • CIVILIANS OVERSEAS DO NOT QUALIFY FOR “EIC” Forward Back Money Matters after Reintegration

23. EARNED INCOME CREDIT • BIG CHANGE FOR 2004! • MILITARY TAXPAYERS CAN ELECT TO HAVE THEIR NONTAXABLE COMBAT PAY INCLUDED IN “EARNED INCOME” FOR PURPOSES OF QUALIFYING FOR THE EIC Forward Back Money Matters after Reintegration

24. CHILD TAX CREDIT • BIG MONEYMAKER FOR MILITARY • $1,000 FOR 2004! • EASY TO OVERLOOK • NEED TO ADJUST WITHHOLDING TO AVOID OVERWITHHOLDING Forward Back Money Matters after Reintegration

25. LIFETIME LEARNING CREDIT • AMOUNT OF TUITION & RELATED EXPENSES INCREASED IN 2003 FROM $5,000/YEAR TO $10,000/YEAR • MAXIMUM AMOUNT OF THE CREDIT INCREASED IS $2,000/YEAR • AMOUNTS PAID BY THE ARMY FOR SOLDIERS’ EDUCATION DO NOT QUALIFY FOR EDUCATION CREDITS Forward Back Money Matters after Reintegration

26. IRA CONTRIBUTION LIMITS • THE MAXIMUM CONTRIBUTION TO A TRADITIONAL OR ROTH IRA IN 2005 INCREASED TO $4,000 • IF YOU ARE OVER 50, THE LIMIT INCREASED TO $4,500 Forward Back Money Matters after Reintegration

27. MILITARY FAMILY TAX RELIEF ACT OF 2003 (MFTRA) Forward Back Money Matters after Reintegration

28. CAPITAL GAINS ON HOME SALES • OWNERSHIP TEST: • MUST HAVE OWNED HOME FOR 2 OF THE 5 YEARS LEADING UP TO SALE • USE TEST: • MUST HAVE LIVED IN HOME FOR 2 OF THE 5 YEARS LEADING UP TO SALE • MFTRA HELPED MILITARY TAXPAYERS MEET USE TEST… Forward Back Money Matters after Reintegration

29. COMBAT ZONE TAX INFO Forward Back Money Matters after Reintegration

30. COMBAT ZONE BASIC VOCABULARY • “COMBAT ZONE” • “QUALIFIED HAZARDOUS DUTY AREA” • “EXCLUSION” • “EXTENSION” • CONSULT PUB 3 Forward Back Money Matters after Reintegration

31. COMBAT ZONES • CREATED BY EXECUTIVE ORDER • OPERATION ENDURING FREEDOM COMBAT ZONE: • AFGHANISTAN & AIR SPACE ABOVE IT • ALSO TROOPS IN DIRECT SUPPORT & RECEIVING HOSTILE FIRE OR IMMINENT DANGER PAY SERVING IN: • UZBEKISTAN, KYRGYSTAN, PAKISTAN, TAJIKISTAN, & JORDAN • YEMEN, THE PHILIPPINES, & DJIBOUTI. Forward Back Money Matters after Reintegration

32. COMBAT ZONES • PERSIAN GULF AREA • IRAQ, KUWAIT, OMAN, BAHRAIN, QATAR, U.A.E., SAUDI ARABIA, & ADJACENT WATERS • TURKEY, IF IN DIRECT SUPPORT OF “OIF” • KOSOVO AREA • KOSOVO, SERBIA, & ALBANIA (PLUS ADRIATIC & NORTH IONIAN SEA) Forward Back Money Matters after Reintegration

33. QUALIFIED HAZARDOUS DUTY AREAS • CREATED BY CONGRESS • FORMER YUGOSLAVIA • BOSNIA, CROATIA, MACEDONIA • ALLIED FORCE • KOSOVO, SERBIA, ALBANIA (PLUS ADRIATIC & NORTH IONIAN SEA) • INCLUDES THOSE IN DIRECT SUPPORT OF OPERATIONS IN QHDA Forward Back Money Matters after Reintegration

34. EXCLUSION • MEANS YOU DON’T HAVE TO PAY TAX ON MILITARY PAY YOU RECEIVE IN CZ OR QHDA • APPLIES TO MILITARY ONLY • ENLISTED & WARRANT OFFICERS • ALL MILPAY EXCLUDED • COMMISSIONED OFFICERS • ANY MILPAY OVER EXCLUDABLE AMOUNT ($6,315.90/MO.) TAXABLE Forward Back Money Matters after Reintegration

35. EXCLUSION • FOR “EACH MONTH OR PART OF A MONTH” SERVED IN CZ OR QHDA • APPLIES TO STUDENT LOAN REIMBURSEMENTS & BONUSES WHICH THE SOLDIER BECAME ENTITLED TO WHILE SERVING IN CZ OR QHDA Forward Back Money Matters after Reintegration

36. EXCLUSION • WHAT ABOUT PAYMENTS FOR LEAVE ACCRUED IN COMBAT ZONE? • WHAT ABOUT TSP CONTRIBUTIONS? • WHAT ABOUT IRA CONTRIBUTIONS? Forward Back Money Matters after Reintegration

37. EXTENSION • MEANS YOU HAVE MORE TIME TO FILE TAX RETURNS AND TAKE CARE OF OTHER TAX MATTERS • APPLIES TO MILITARY AND SOME CIVILIANS IN CZ OR QHDA • ALSO APPLIES TO THOSE IN DIRECT SUPPORT OF OPERATIONS IN CZ OR QHDA Forward Back Money Matters after Reintegration

38. EXTENSION • 180 DAYS FROM DATE SOLDIER REDEPLOYS, PLUS # OF DAYS SOLDIER HAD LEFT TO FILE WHEN (S)HE DEPLOYED • IF SPONSOR HAS EXTENSION, SO DOES THE SPOUSE! Forward Back Money Matters after Reintegration

39. Useful websites: • www.irs.gov • www.mypay.dfas/mil/mypay.aspx • 2004 W2’s are available December 27, 2004 Forward Back Money Matters after Reintegration

40. Do you need an advisor? Counseling is available, Army Community Service (ACS), Building #7029, Room 117. Call 469-8487 for appointment We also have the following classes available: Financial Readiness and Management Home Buying Car Buying Investments Checkbook and many more. Back Money Matters after Reintegration END