Debt and Claims Management -- Online Customer Service

What is a DFAS Form 705?

If you were overpaid pay, allowances, or certain other entitlements by the Department of Defense, the overpayment was established as a debt to the United States and was reported as taxable income in that year.  The DFAS form 705 is used to certify the amount you paid towards the principal balance of that debt during subsequent calendar years. You will receive a DFAS form 705 for each year that you make payments towards the principal of a debt that was previously included in your taxable income. This certificate is for your use and may assist you in reducing your tax liability for the calendar year you made payments.  You should keep the certificate with your tax records for that year, but you do not need to attach a copy when you file your return.
If the amount you repaid is less than $3,000, you may be able to itemize deductions and claim the repaid amount as a miscellaneous deduction (Rev. Rul. 79-311).  If the repaid amount is more than $3,000, you may be able to deduct the amount repaid as a miscellaneous deduction or use the amount repaid to compute a credit against your tax liability (26 U.S.C. Sec. 1341).
The Defense Finance and Accounting Service cannot advise you in the preparation of your tax return.  Any questions you have concerning your tax adjustment should be directed to the Internal Revenue Service or a professional tax advisor.