New law provides additional tax benefits for military personnel.Members of the Armed Forces and their families gained a number of new tax benefits when the Military Family Tax Relief Act of 2003 was signed into law by President Bush on Nov. 11, 2003. Military personnel covered by the bill include all those serving in regular and reserve units of the Army, Navy, Air Force, Marines and Coast Guard. Also covered by the law are the commissioned corps of the National Oceanic and Atmosphere Administration and the commissioned corps of the Public Health Service. The tax changes include the following: * Members of the Armed Forces serving in a contingency operation A military operation that is either designated by the Secretary of Defense as a contingency operation or becomes a contingency operation as a matter of law (10 United States code (USC) 101[a][13]). It is a military operation that: a. are now eligible for the same extension of the tax filing deadline as applies to members of the Armed Forces serving in a combat zone. * The 5-year period used to determine whether taxpayers can exclude gain from the sale of their main home may be suspended sus·pend v. sus·pend·ed, sus·pend·ing, sus·pends v.tr. 1. To bar for a period from a privilege, office, or position, usually as a punishment: suspend a student from school. during the period the taxpayer or spouse spouse A legal marriage partner as defined by state law served on qualified official extended duty as a member of the Armed Forces. * Military base realignment and closure Base Realignment and Closure (or BRAC) is a process of the United States federal government directed at the administration and operation of the Armed Forces, used by the United States Department of Defense (DoD) and Congress to close excess military installations and realign benefits are now generally excludable from income. * Benefits received after 2002 under a dependent-care assistance program now are nontaxable. * The death gratuity Money, also known as a tip, given to one who provides services and added to the cost of the service provided, generally as a reward for the service provided and as a supplement to the service provider's income. paid to a survivor of a member of the Armed Forces has been increased to $12,000 and is all nontaxable. In addition, the Act also provides tax relief in the areas of distributions from a qualified tuition For tuition fees in the United Kingdom, see . Tuition means instruction, teaching or a fee charged for educational instruction especially at a formal institution of learning or by a private tutor usually in the form of one-to-one tuition. program and deductibility of travel expenses for Armed Forces Reserve members. Practitioners with clients affected by the new law can find additional details on the Internal Revenue Service's Web site at: http://www.irs.gov/newsroom/article/0%2C%2Cid=1181 04%2C00.html. In addition, the IRS has released Publication 3, "Armed Forces' Tax Guide," for use in preparing 2003 returns, available at: http://www.irs.gov/pub/irs-pdf/p3.pdf. The guide provides further details about the Military Family Tax Relief Act, as well as important changes made by the Service Members Civil Relief Act. IRS Tax Talk Today Program Explores Tax Shelters tax shelter: see tax exemption. Tax shelters were the subject of the Internal Revenue Service's Tax Talk Today program on Feb. 10. An IRS report on trends seen in tax shelter activity; issue identification, legal guidance and analysis of shelters; and a review of current IRS tax shelter regulation and compliance strategies were covered in the Web cast. To access the archived program (available for one year after broadcast), go to www.taxtalktoday.tv. The Web site also provides information regarding eligibility for CPE (Customer Premises Equipment) Communications equipment that resides on the customer's premises. CPE - Customer Premises Equipment . |
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