The Military Tax Relief Act of 2003 provides new benefits to
those serving in the military and their families. The law was
signed by President Bush on November 11, 2003. Here are some of the
key provisions.
The Military Tax Relief Act of 2003 provides new benefits to those serving in the military and their families. The law was signed by President Bush on November 11, 2003. Here are some of the key provisions.
Home sales
Under current tax law, an unmarried person can exclude from income up to $250,000 of the gain from the sale of a home, provided that the individual has owned and used the home as a principal residence for two out of the five years before the sale. (Otherwise, the exclusion is reduced.) A married couple can exclude up to $500,000, subject to similar conditions. However, someone on extended military duty away from home who sells a principal residence could fail the use test, thereby losing all of it’s benefits. The 2003 law allows military personnel to disregard up to ten years of extended duty service when determining the five-year test period. This lengthens the window for determining the five-year period and increases the likelihood that military personnel can qualify to exclude the gain.
Travel expenses
The cost of transportation, meals, and lodging incurred by National Guard and Armed Forces reserve personnel who travel more than 100 miles away from home and who stay overnight can now be used to reduce adjusted gross income. As a result, these individuals will receive a tax benefit for travel expenses even if they do not itemize their deductions.
Death benefit
The new law doubles the death benefit to $12,000 and makes all of this payment tax-free. Previously, only $3,000 of the payment was tax-free.
The law contains a number of other minor changes. Also, some benefits are retroactive, so filing amended tax returns may be appropriate. Let us know if you would like more details or if we may be able to assist you.
