What Is DFAS Form 705 and Why Did You Receive It?
Understand DFAS Form 705, why you received it, and how it relates to your financial records, potential adjustments, and necessary next steps.
Military personnel and Department of Defense (DoD) employees receive various financial documents related to their pay and benefits. One such document, DFAS Form 705, often causes confusion for those unfamiliar with its purpose.
Understanding why this form was issued and what it contains is essential for maintaining accurate financial records.
Reason for Issuance
DFAS Form 705 is issued for financial transactions affecting an individual’s pay or entitlements. A common reason is adjustments due to changes in duty status, such as deployments, reassignments, or separations. When transitioning between active duty, reserve status, or retirement, recalculations are documented on this form.
Changes in allowances or deductions also trigger this form. If a service member’s Basic Allowance for Housing (BAH) changes due to dependency status or duty location, the form reflects the updated amount. Adjustments in tax withholdings, such as changes in state residency or exemptions, are also recorded.
Errors in previous pay periods may lead to corrections. If incorrect amounts were withheld for Social Security, Medicare, or federal income tax, DFAS issues adjustments to comply with IRS regulations. These corrections can impact taxable income reported on a W-2.
Key Financial Data
DFAS Form 705 details earnings, deductions, and adjustments. The total taxable wages figure is crucial, as it affects income tax liability. This amount includes base pay, special pay, and taxable allowances. Reviewing it ensures accuracy when filing taxes.
The form also lists non-taxable allowances, such as Family Separation Allowance (FSA) and portions of Basic Allowance for Subsistence (BAS). While not taxed, these payments are essential for budgeting. Incentive and proficiency pay, such as flight or hazardous duty pay, are itemized separately for tracking additional compensation.
Deductions include mandatory withholdings like Social Security (6.2%) and Medicare (1.45%), as well as voluntary allotments such as Thrift Savings Plan (TSP) contributions or Servicemembers’ Group Life Insurance (SGLI) premiums. Reviewing deductions ensures elections for retirement savings or insurance align with financial goals.
Overpayment or Debt Adjustments
Administrative errors, entitlement changes, or retroactive policy updates can result in overpayments. When DFAS identifies an overpayment, the amount is typically deducted from future paychecks. If a service member received excess special pay due to outdated eligibility, DFAS issues a debt adjustment.
Debt collection follows federal guidelines under the Debt Collection Improvement Act. If payroll deductions cannot recover the debt—such as when a service member has separated—DFAS may refer the balance to the U.S. Treasury for collection, leading to offsets against tax refunds or garnishments of Social Security benefits. Interest and administrative fees may apply if repayment is delayed.
Service members may request a debt waiver or remission if the overpayment was not their fault and repayment would cause financial hardship. Requests must be submitted through the appropriate finance office with supporting documentation, such as proof of income and expenses. Approval is not guaranteed, but waivers can reduce or eliminate repayment obligations.
Required Supporting Paperwork
Proper documentation is necessary for verifying DFAS Form 705 or disputing discrepancies. The required paperwork depends on the adjustment type. If the issue involves a correction to entitlements, such as a change in basic pay due to promotion or demotion, official personnel records like DD Form 214 (Certificate of Release or Discharge from Active Duty) or orders reflecting the rank change may be needed.
For travel reimbursements or per diem adjustments, supporting documents include travel vouchers (DD Form 1351-2), lodging receipts, and approved travel authorizations. These records verify reimbursed amounts and ensure compliance with Joint Travel Regulations. Errors in these payments can result from incorrect per diem calculations, mileage miscalculations, or delayed processing of travel claims.
If DFAS Form 705 reflects a debt related to unpaid healthcare premiums or medical allowance overpayments, documentation such as Leave and Earnings Statements (LES), proof of TRICARE enrollment, or prior payment records may be necessary. These records confirm whether deductions were applied correctly and whether outstanding balances resulted from administrative errors.
Next Steps After Receiving the Form
After receiving DFAS Form 705, reviewing it promptly is essential. Compare the figures with recent Leave and Earnings Statements (LES) and other payroll records. If the adjustment affects taxable income, check how it aligns with year-to-date earnings on tax documents.
If an error is found or clarification is needed, contact the appropriate finance office or DFAS customer service. Service members can submit inquiries through the myPay system or consult their unit’s finance personnel. For debt adjustments, requesting a detailed breakdown of the overpayment can help determine if repayment is necessary or if a waiver or appeal is an option. Those seeking a waiver must follow DFAS submission procedures, typically requiring financial hardship documentation and a written explanation.