back

House Passes Bill to Bring Tax Relief to Military Men and Women and Their Families

Measure Includes Tax Relief for Astronauts who Lose Their Lives on a Space Shuttle Mission

WASHINGTON –  The House of Representatives yesterday passed legislation – H.R. 1664, the Armed Forces Tax Fairness Act – delivering common-sense tax relief to the men and women serving in America’s Armed Forces and their families.  This includes making needed improvements to the law permitting a capital gain exclusion for the sale of one’s home, extending filing deadlines for troops serving in contingency operations, and providing a tax deduction for travel expenses of certain military reservists. 

The measure also extends the same kind of income and estate tax relief that applied to victims of the September 11 terrorist attacks to astronauts who lose their lives serving on a space shuttle mission, including Racine’s Laurel Clark and her colleagues on the shuttle Columbia. 

“These are simple steps that make a positive difference for our troops and their families – as well as the families of those who lose loved ones on space missions, like Racine hero Laurel Clark,” Ryan said. “We owe these brave individuals a debt of gratitude that cannot be repaid.  Making the tax code fairer for them is the least we can do to ease the burden on people who give so much in service to our country.”

The following are among the highlights of H.R. 1664:

·        Capital Gain Exclusion for Home Sales – Under current law, individuals may exclude up to $250,000 ($500,000 if married filing a joint return) of gain from the sale of a home if they resided in the home for two of the five years preceding the sale.  The bill allows military and Foreign Service personnel to ignore time transferred away from home on official extended duty for purposes of determining the five-year period.

·        Tax-free Treatment of Death Gratuity Benefits – Under current law, survivors of members of the military receive a $6,000 death gratuity payment, but only half of it is tax-free.  The bill provides that the full $6,000 payment is tax-free.

·        Tax-free Treatment of Homeowners’ Assistance Program (HAP) Payments – Under current law, members of the Armed Forces can receive payments under HAP to compensate them for a drop in home values resulting from military base closures or realignments.  The bill provides that these payments are tax-free.

·        Extend Combat Zone Filing Rules to Contingency Operations – Under current law, several deadlines under the tax code (such as filing tax returns and making tax payments) are extended for certain individuals serving in a combat zone during a period of combatant activities.  The bill applies these deadline extension rules to individuals serving in “contingency operations” (in other words, military operations designated by the U.S. Secretary of Defense in which personnel are or may become involved in military actions during a war or national emergency declared by the President or Congress.)

·        Tax-free Treatment of Dependent Care Benefits – Clarifies that dependent care assistance provided under a military dependent care assistance program is tax-free.

·        Above-the-line Deduction for Overnight Travel Expenses of Military Reservists – The bill provides an above-the-line deduction for up to $1,500 of non-reimbursable travel expenses incurred by military reservists who serve more than 100 miles away from home and stay overnight.

·        Extension of Victims’ Tax Relief to Astronauts Who Die on Space Missions – Extends the income and estate tax relief provisions of the Victims of Terrorism Tax Relief Act to astronauts who lose their lives in a space shuttle mission. 

back