GetThis: Tax Act Spells Relief For Military Families
By Carl Surran
Spring 2004
This tax season, military families could find more money in their pockets thanks to the Military Family Tax Relief Act of 2003. The Act amends and clarifies several provisions of the tax code that previously put service members at a disadvantage for tax savings. Changes include:
- Loosening rules for exclusion of capital gains earned from the sale of a primary residence for service members called to active duty away from home
- Excluding from taxable income homeowners assistance payments made after Nov. 11, 2003 to compensate service members for declines in property value
- Doubling the military death benefit from $6,000 to $12,000, and making the entire amount tax-free
- Clarifying that dependent care assistance benefits are not included in gross income
- Expanding opportunities to contingency operations for deadline extensions for members serving in combat zones
- Creating an "above-the-line" deduction for certain non-reimbursed travel expenses of National Guard and Reserve members
- Allowing penalty-free withdrawals from 529 plans or Coverdell Education Savings Accounts to pay for qualified tuition at U.S. Military Academies
For detailed information about the Military Family Tax Relief Act, visit www.irs.gov.
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Carl Surran is managing editor of Military Money.
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