<p>Is is true that the monthly stipend that mids earn while at the academy is taxed by the government as "pay for services rendered"? If so, is it on the gross amount or the net amount of pay, which for a plebe is not much I understand. If it the gross amount and then you also have to pay for uniform, haircuts, cobbler, etc., which are required, then there is actually a real cost to attend after tax. Does anyone know more of the details? Thanks</p>
<p>You will get a regular W-2 form which shows withholding for medicare, social security, federal and state tax based on your gross wage.</p>
<p>CM</p>
<p>motivated1,</p>
<p>A midshipman's monthly pay is NOT a stipend. You do have to pay taxes as CM stated. Sorry, there is no free lunch. :)</p>
<p>The Navy ROTC stipend is tax free because it is a stipend not pay.</p>
<p>Cadets/Midshipmen receive a W-2 just like any other wage earner, and state and federal income tax is withdrawn from that pay prior to being deposited in their bank accounts.
Don't get too wrapped up in the what if's, etc. They are not really making any significant $$ during their time at the Academy. Most are below the 'taxable' rate and will receive either state or federal refunds.</p>
<p>Darn tootin'. You think the .gov is gonna let you slide?</p>
<p>Don't feel bad, though. You'll be making so little, the taxes won't really matter. ;)</p>
<p>BTW, if you are so lucky as to come from a state with no state income tax (Florida, Nevada, Alaska, etc.) MAKE SURE YOU REGISTER THAT WAY. Don't be silly and put down Maryland.</p>
<p>ETA: On active duty after graduation, you will receive something called Basic Allowance for Subsistance (BAS), Basic Allowance for Quarters (BAQ), and Variable Housing Allowance (VHA). None of those are taxed for reasons only a tax lawyer can give you. This is, of course, assuming these haven't changed since 1996.</p>
<p>I honestly don't remember if Mids receive anything equivalent to BAS. Somehow I doubt it.</p>
<p>
[quote]
I honestly don't remember if Mids receive anything equivalent to BAS.
[/quote]
</p>
<p>It's called chow in the Ward Room. :) When you aren't at the academy during the summer you get COMRATS (Commuted Rations).</p>
<p>Tell me about it!</p>
<p>During my Firstie Summer, I got TEN WEEKS of it while ON LEAVE! :D</p>
<p>So what exactly are COMRATS? ...????</p>
<p>Similar to per-diem, IIRC. Basically, they calculate that it costs you $x a day to feed yourself. Well, they pay you that on top of your regular paycheck. </p>
<p>In my day, you put in your claim and paperwork upon the reformation of the Brigade, and got your Direct Deposit a few weeks later.</p>
<p>OK, thanks for the great info. I am still somewhat confused about the expenses we have heard about at the academy-uniforms, barber, cobbler,computer, books. Is it correct to say that WE pay for these (not the gov) and can use, for example, 529 college plan funds to pay for these? Do we put $$ in an account for these things during the year?</p>
<p>And the next question from the parents of plebes/mids will be, can I and should I still use my son/daughter as a deduction following his first year at the academy?</p>
<p>
[quote]
Is it correct to say that WE pay for these (not the gov)
[/quote]
That's exactly right. They issue it, YOU pay for it via a deduction from your bank account that you have no say over. There is a reason why plebes make $25 per month first semester, and $50 per month second semester (that was the pay in my day. I'm sure inflation has adjusted it a bit.)</p>
<p>As for whether you can use 529 funds, I THINK you can. I seem to have heard about this around here a long time ago. You may want to try a search.</p>
<p>
[quote]
can I and should I still use my son/daughter as a deduction following his first year at the academy?
[/quote]
Consult your local tax professional. :D</p>
<p>Zaphod, You're amazingly quick on the response- much appreciated...
What $$ are needed to get the plebe off and running for computers, uniforms, shoes, etc. ? Are $$ taken out of monthly pay or do funds come from savings, etc ? I've read $2200 and also $6000 in cc somewhere but can't find it now...</p>
<p>^^^^^
When the candidates report to the Naval Academy they are required to remit a $2,500 deposit that goes toward the uniforms, computer, and other issued items.</p>
<p>Class of 2010 paid an initial fee of $2500.00</p>
<p>It is our understanding that the $2500.00 was for the initial uniform and computer issue. All plebes were also issued a $6000.00 advance of which the continuing uniform issue is being charged against. The mids then spend the next “x” years paying off that advance. Son has never seen a pay statement or ledger showing the payoff of the loan so we don’t know if the pay off is 1 year or all 4 years. I seem to recall that there is no interest on the advance therefore it’s not really a loan. </p>
<p>In the paperwork that was sent in prior to I-Day, son also was given the option to “finance” the $2500.00. Since we paid this, I do not know if there would have ben an interest charge.</p>
<p>You are right, there is a deposit of $2500 that is required before you report on I-Day. Scholarship money can be applied to this amount. The $2500 does not cover the cost of all the uniforms, computer, etc. As a result, money is deducted from the Mids pay with more taken out during Plebe year and this decreases every year. A Plebe takes home roughly $100/month and that increases to roughly $400/month as a Firstie. This are approximate amounts after all taxes and deductions for expenses.</p>
<p>We really appreciate the help form all of you. It certainly gives us an idea as to what we need financially. CC and all of you are terrific!</p>
<p>If I recall, there was a lot of discussion re: tax deductions on this site back in the early spring... I believe many of the comments agreed that, with the exception of plebe year, you would not be able to claim Mid as a deduction.</p>
<p>There was a lot of good info posted- try using the advanced search feature in the SA forum if you want to wade through it all!</p>
<p>As far as taxes and deductions, I would suggest everyone seek advice from their tax professional. Every tax accountant or attorney has a different interpretation of the tax code so a simple statement of "after plebe year you can not claim your midshipman" may not be what you are advised by your professional.</p>
<p>We were told by our tax "professional" as well as the academy(USMA) that even Plebe year we would not be able to claim our daughter as a dependent. It's not about the number of days they lived with you in a year, its the dollars you contributed to their support, and once they hit the academy, the dollars are really piled on by the government vs anything we could show.</p>