Wrong. Despite having my bank information for years, they mailed a paper check. I bank with USAA which does not have a physical location, so I had to request some deposit slips from them to mail in this archaic, paper check. Before I could even get the check deposited, I received a letter that I was overpaid $2700 and that interest was already accruing on this balance, so I needed to give it back right away. I called the number for the VA Debt Management office and spoke to the nicest, most helpful VA employee I've ever had contact with. The lady on the phone told me they could start taking the debt from my monthly checks and that it would be paid off by February's check. I asked why this wasn't the default option and she didn't know why. She changed my preference back to direct deposit and that was that. So I thought.
Yesterday I receive 5 letters in the mail from the VA, all stamped 23FEB2010 which each individual letter dated 15JAN2010. One letter tells me I've been denied VA benefits. One says I've been accepted for chapter 1606 benefits. Another says I've been accepted for chapter 1607 benefits. One says my GI Bill is on hold because I've been deployed since 2007. The fifth says that I had a debt of $189 but now it's $0 (which would mean I had $0 owed when I called the VA).
What the fuck, over. Also, still owed $5000 from the National Guard, marching towards 3.5 years on that issue. A part of me deep inside knows that this issue will persist through the deployment, as filling out wills and power of attorney forms takes "priority" over getting paid.
EDIT: I should clarify a bit:
In November 2009 I received half of what I was owed: $5000 in cash less 25% federal taxes. The other $5000 was "given" to me in the form of a DoD form that says that the federal government acknowledges that I "overpaid" $5000 from 2006-2008 and that it is a "certificate to reduce tax liability." These were "emergency" concessions made by one of my state senators and my chain of command. Everyone is 100% convinced that this means I will get an extra $5000 back on my 2009 federal taxes. This is not what it means. Reduction of tax liability is another way to say tax deduction. As I am single, with no house, children, investments nor do I own my own business, I am only eligible for one standard deduction ($5700) and no more. Tax deductions do not stack to infinity and since the $5000 deduction certificate is less than $5700, I would lose money by using it. I have taken it to multiple independent tax preparers and corporate chains (H&R block, etc) and everyone has said the same thing. If I were to use this deduction certificate, I would be taxed on $700 more of 2009's income, meaning my refund would be less and I would lose money.