RAAUZYUW RUDIDFB1700 0431000-UUUU--RHMCSUU. ZNR UUUUU R 121000Z FEB 10 ZYB FM DFAS CLEVELAND OH//JFLF// TO AIG 4676// AIG 4678// BT UNCLAS //N07220// MSGID/GENADMIN/DFAS-CL CODE JFLF// SUBJ/MILITARY PAY INCOME TAX EXEMPTION FOR THE STATE OF KENTUCKY// MILITARY PAY ADVISORY 10/10// REF/A/DOC/KENTUCKY REVISED STATUTE (KSR) 141.010(10)(U)// REF/B/DOC/NAVY DJMS PROCEDURES TRAINING GUIDE (PTG)// NARR/REF A IS THE KSR THAT PROVIDES FOR KENTUCKY'S MILITARY PAY INCOME TAX EXEMPTION. REF B IS THE NAVY'S DJMS PROCESSING AND REFERENCE GUIDE.// POC/CARMELITA LANIER/SYSTEMS LIAISON AND PROCEDURES/DFAS-CL CODE JFLF/COM (216) 522-6888/DSN 580-6888// RMKS/1. THE PURPOSE OF THIS MESSAGE IS TO ANNOUNCE THAT THE FOLLOWING MODIFICATIONS TO TAX WITHHOLDING FOR THE STATE OF KENTUCKY ARE EFFECTIVE JANUARY 1, 2010, FOR MEMBERS CLAIMING KENTUCKY AS THEIR STATE OF LEGAL RESIDENCE. 2. IAW REF A, ACTIVE DUTY MEMBERS, MEMBERS OF THE NAVAL RESERVE AND UNIFORM SERVICES UNIVERSITY OF HEALTH SCIENCES (USUHS) STUDENTS WILL BE EXEMPT FROM KENTUCKY INCOME TAX. 3. MEMBERS THAT ARE NOT EXEMPT FROM KENTUCKY INCOME TAX ARE SERVICE ACADEMY PREPARATORY STUDENTS, SERVICE ACADEMY MIDSHIPMEN, COLLEGE FIRST STUDENTS, ROTC MIDSHIPMEN AND DUAL STATUS ROTC. MEMBERS RECEIVING A MILITARY STIPEND ARE ALSO NOT EXEMPT. 4. STATE INCOME TAX WITHHOLDING WILL BE ELIMINATED ON PAYMENTS ISSUED 15 JAN 2010 FOR ACTIVE MEMBERS CURRENTLY HAVING KENTUCKY AS THEIR STATE OF LEGAL RESIDENCE. ACTIVE MEMBERS AND USUHS STUDENTS THAT DID NOT HAVE KENTUCKY ESTABLISHED AS THEIR STATE OF LEGAL RESIDENCE FOR THE 15 JAN 2010 PAY DATE MUST HAVE THEIR FINANCE OFFICE SUBMIT A FK04 TRANSACTION WITH A DEDTN-ELECTN EQ N. THE START DATE MUST BE CURRENT PROCESSING MONTH DATE I.E. FK04 SUBMITTED 100301 THE INPUT START DATE S/B 1003. 5. MEMBERS OF THE NAVAL RESERVE THAT HAVE NOT ESTABLISHED LEGAL RESIDENCE SHOULD HAVE THEIR FINANCE OFFICE SUBMIT AN A17 WHEN ESTABLISHING KENTUCKY AS THEIR STATE OF LEGAL RESIDENCE. RESERVISTS WILL NEED TO OBTAIN A REFUND OF ANY KENTUCKY STATE INCOME TAX WITHHELD WHEN FILING THEIR 2010 KENTUCKY INCOME TAX RETURN. 6. THIS INFORMATION WILL BE INCORPORATED IN REF B. BT 1700 NNNN