San Diego, CA - Last month, President Bush signed into law tax relief for service members and veterans that will provide more than $1.2 billion in tax relief. These new provisions included allowing active duty troops to withdraw money from retirement plans without a tax penalty for two years, and allowing families of reservists killed in the line of duty to collect life insurance from civilian employers.
The ten main benefits of the new legislation are listed below.
Benefit 1: The ability for active duty troops to withdraw money from retirement plans, and an allowance of two years to replace the funds without tax penalty.
Benefit 2: A 180-day period for reservists called to active duty to use unspent funds in a health flexible spending account or cafeteria plan.
Benefit 3: The ability for military families to count most military cash allowances beyond basic pay to be treated as earned income for purposes of determining supplemental security income (SSI) eligibility and benefit amounts, and treat certain housing payments as in-kind support and maintenance.
Benefit 4: Clarification that members of the military who file a joint tax return would be eligible for the stimulus rebate payment even if the spouse does not have a social security number.
Benefit 5: A one year extension of parity between mental and physical health benefits. Honoring our veterans.
Benefit 6: A permanent allowance for all veterans to use qualified mortgage bonds to purchase their homes.
Benefit 7: Extension of a provision that gives retired veterans more time to claim a tax refund on some types of disability benefit payments.
Benefit 8: The ability for families of reservists killed in the line of duty to collect life insurance and other benefits provided by the civilian employer.
Benefit 9: The ability for families of soldiers killed in the line of duty to contribute up to 100 percent of survivor benefits to retirement savings accounts or to education savings accounts.
Benefit 10: IRS web site for military personnel the IRS has added a special section to its web site, www.irs.gov to explain the benefits and services available to those serving in the us armed forces.