A child disabled before age 18, or before age 22 if a full-time student when the disability occurred, is an eligible beneficiary so long as the disability exists and the child remains incapable of self-support. DFAS-DE reinstates a child’s annuity when a child between the ages of 18 and 22 reenters school on a full-time basis, or a disabling condition recurs making the child incapable of self-support. Marriage at any age terminates a child’s eligibility. The monthly annuity for children is 55 percent and is not reduced by DIC or when a disabled child attains age 62. Marriage at any age terminates a child’s eligibility.
Survivor annuities are taxable income. You will receive a tax statement from the Defense Finance and Accounting Service at the end of the year. The statement will show the full amount of the annuity payments you received and the total amount of tax withheld during the year.
Unless you elect otherwise, the amount of federal income tax withheld (FITW) will be as if you were a married individual claiming three exemptions.
If you want your FITW changed at a later date, you must complete a new TD-Form W-4P, Withholding Certificate for Pension or Annuity Payments, showing the changes, and mail it to DFAS-DE/FRB, 6760 E. Irvington Place, Denver CO 80279-6000.
The Defense Finance and Accounting Service withholds a 30 percent Federal income tax on annuities paid to nonresident aliens unless the beneficiary resides in a country that has a tax treaty with the United States specifying a different withholding rate. Address questions to the Internal Revenue Service, Assistant Commissioner (International), ATTN: IN:C:TPS, 950 L’Enfant Plaza South, SW, Washington DC 20024-2123, or contact the nearest American Embassy.
Annuities may be subject to Federal estate taxes. Beneficiaries should address tax questions to a legal assistance officer or the nearest Internal Revenue Service office.
A certificate of continued eligibility form will be sent to you each year prior to your birthday. Complete and return the form promptly so the Defense Finance and Accounting Service can continue your annuity without interruption. Read the instructions on the form and make sure you have completed it correctly. Sign and date the form and send it to DFAS-DE/FRB, 6760 E. Irvington Place, Denver CO 80279-6000.
Dependency and Indemnity Compensation (DIC) Offset. The Defense Finance and Accounting Service reduces a surviving spouse’s annuity by the amount of DIC the VA awards and pays the surviving spouse. The SBP annuity is not reduced by the amount of a child’s DIC entitlement.
The claim forms required to apply for this benefit are DD Form 2656-4 (this form is not available electronically), TD-Form W-4P, Withholding Certificate for Pension or Annuity Payments, (available from the Post Office or IRS), and SF 1199A, Direct Deposit Sign-Up Form. The Defense Finance and Accounting Service may require additional documents in order to establish an annuity (i.e., Representative Payee documentation; school certification; physician’s statement for disabled child over age 18).