Military pay, Social Security, and Medicare

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ahd929

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Hi all,
I am doing Air Force FAP and was commissioned last May, so I am technically in the reserves now. I noticed on my Air Force pay stubs and my W2 that I don't have any money withheld for Social Security or Medicare. I called the Reserve Pay Office and they said that it's because military pay is somehow exempt from those withholdings. I was satisfied with that but then I checked the Social Security Administration website and found this:

"While you are in military service, you pay Social Security taxes just as civilian employees do. In 2011, the tax rate is 5.65 percent, up to a maximum of $106,800. If you earn more, you continue to pay the Medicare portion of the tax (1.45 percent) on the rest of your earnings."

http://www.ssa.gov/pubs/10017.html

And I couldn't find any information refuting that. Can anyone help me shed some light on this? Thanks!

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I'm not too familiar with FAP, but if your monthly pay is considered a stipend, then they may be subject to federal income tax but not the payroll taxes. If you received a LES for your annual bonus, double-check that, as I'm fairly certain that is considered regular wages for all taxes. If they deducted payroll taxes from that, then you can reasonably assume they're not just forgetting to deduct taxes.
 
Yeah, I checked. It only gets more confusing though. My monthly pay is a stipend, and it has state tax withheld but no federal tax or payroll tax. My bonus was just listed as "FAP BNS" and had federal tax and state tax withheld, but no payroll tax. Even though I don't get federal tax withheld from my monthly stipend, when I filed my taxes just this past week I was still due a refund (that is, the federal tax withheld from my bonus was sufficient to cover all the federal tax I owed for the year, apparently). Whether that was an accident or planned I don't know. Anyway, I don't know who else to ask about this payroll tax issue and I kind of don't want to go to prison for tax evasion.
 
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