Death benefits
The death gratuity paid to survivors of deceased Armed Forces members
rises to $12,000 and is not taxable (was $6,000, with $3,000 tax-free).
Effective for deaths occurring after 9/10/2001. Taxpayers amending a
return to use this provision should put “Military Family Tax Relief Act”
in red in the top margin of Form 1040X.
Sale of principal residence
A taxpayer on qualified official extended duty in the U.S. Armed
Services or the Foreign Service may suspend for up to 10 years of such
duty time the running of the 5-year ownership-and-use period before the
sale of a residence. This applies when the duty station is at least 50
miles from the residence – or while the person is residing under orders
in government housing – for a period of more than 90 days or for an
indefinite period. This election, which is an option for the taxpayer,
applies to only one property at a time. Retroactive for home sales after
May 6, 1997. Although taxpayers normally have only three years to file
an amended return, qualifying taxpayers who sold a residence before 2001
have until Nov. 10, 2004, to amend their returns for this purpose.
Taxpayers amending a return to use this provision should put “Military
Family Tax Relief Act” in red in the top margin of Form 1040X.
Deduction for overnight travel expenses of National Guard and Reserve
members
Reservists who stay overnight more than 100 miles away from home while
in service (e.g., for a drill or meeting) may deduct unreimbursed travel
expenses (transportation, meals and lodging) as an above-the-line
deduction. The deduction is limited to the rates for such expenses
authorized for federal employees, including per diem in lieu of
subsistence. Effective for tax years after 2002. For 2003, taxpayers
will use Form 2106 or 2106-EZ to figure the deduction amount and carry
it as a “write-in” to Form 1040, line 33, putting the letters “RC” and
the amount on the dotted line and including this subtraction in the
entry for line 33.
Dept. of Defense Homeowners Assistance Program
Payments made after Nov. 11, 2003, under this program to offset the
adverse effects on housing values of military base realignments or
closures will be excludable from income as a fringe benefit.
Combat zone extensions expanded to contingency operations
The various extensions granted to combat zone participants to file
returns or pay taxes will also apply to those serving in Contingency
Operations, as designated by the Secretary of Defense. Effective for any
acts whose deadline has not expired before Nov. 11, 2003.
Dependent care assistance programs
Clarifies that dependent care assistance programs for military personnel
are excludable benefits. Effective for tax years after 2002.
Military academy attendees
The ten percent tax on payments from a Qualified Tuition Program or
Coverdell Education Savings Account that are not used for educational
expenses does not apply to attendees of the U.S. Military, Naval, Air
Force, Coast Guard or Merchant Marine Academies, to the extent the
payments do not exceed the costs of advanced education. Effective for
tax years after 2002.
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here.
Related Articles:
Military Tax
Relief
Military Tax Relief 2
Military Spouse Careers
American Jobs Creation Act of 2004
Missed Tax Deductions
