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Military Combat Zone Pay and Economic Stimulus Act Eligibility.

On Feb. 13, 2008, President Bush signed into law the Economic Stimulus Act of 2008 (the "Stimulus Act"). The Stimulus Act provides U.S. taxpayers with an income tax rebate of $600 (for an individual), $1,200 (for a married couple) and $300 (for qualifying children under age 17). The tax rebate is based upon a taxpayer's 2007 taxable income, as reflected on their federal income tax return. The tax rebate is phased out for individuals beginning at $75,000 in adjusted gross income, and for married couples at $150,000.

On March 20, 2008, the Internal Revenue Service clarified application of the Stimulus Act by issuing IR-2008-48. Similar to the benefits provided under Section 106 of Title I of the Tax Relief and Health Care Act of 2006 (H.R. 6111), the release provides U.S. service members, serving in a designated combat zone, the opportunity to qualify for the Stimulus Act rebate in spite of the fact they may not be required to file a federal income tax return. Service members will have the option of including their nontaxable combat zone compensation on their 2007 or 2008 federal income tax returns if it will assist them in gaining eligibility for the Stimulus Act rebate.

To receive the rebate, the service member must: (i) show at least $3,000 in qualifying income (earned income, combat zone pay, Social Security benefits or Veterans Affairs benefits) on their tax return; (ii) file their 2007 federal income tax return on or before Oct. 15, 2008 (extended filing date of 180 days after leaving a combat zone) to receive the tax rebate in 2008; and (iii) file Form 1040A with the IRS (report the nontaxable combat duty pay on Line 40b of Form 1040A). Alternatively, a service member may wait and file for the refund based upon their 2008 taxable income.

LT Marc J. Soss, SC, USN (RC)
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Title Annotation:News You Can Use
Author:Soss, Marc J.
Publication:Navy Supply Corps Newsletter
Date:May 1, 2008
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