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Tax Benefits Enacted in the 108th Congress for Military Personnel, Date: November 17, 2004 1 (November 17, 2004)

handle is hein.tera/crstax0088 and id is 1 raw text is: Order Code RS21976 November 17, 2004 CRS Report for Congress Received through the CRS Web Tax Benefits Enacted in the 108th Congress for Military Personnel Pamela J. Jackson Analyst in Public Sector Economics Government and Finance Division Summary Many bills proposed tax relief for the armed forces in the 108th Congress. Two bills were enacted: the Military Families Tax Relief Act of 2003 (H.R. 3365), that became public law (P.L. 108-121) on November 11, 2003, and the Working Families Tax Relief Act of 2004 (H.R. 1308), that became public law (P.L. 108-311) on October 4, 2004. The Military Families Tax Relief Act (MFTRA) contains several provisions that: 1) increase the death gratuity payment and make it fully tax-exempt; 2) provide members of the military with extended time to defer capital gains resulting from the sale of their principal residences; 3) exempt from income benefits received from the Department of Defense Homeowners Assistance Program; 4) expand combat zone filing rules to include military personnel involved in contingency operations; 5) extend the criteria defining membership in veterans' organizations; 6) create an above-the-line deduction for overnight travel expenses of National Guard and reserve members; and a few other items. The Working Families Tax Relief Act (WFTRA) provides a variety of family tax provisions, some of which address military personnel. In particular, WFTRA allows the combat zone compensation of members of the armed forces to be included in earned income for the purpose of calculating the refundable portions of the Child Tax Credit and the Earned Income Tax Credit. This report, which provides information about the various forms of tax relief that were introduced and subsequently legislated, will not be updated. Legislative History The Military Families Tax Relief Act of 2003 (P.L. 108-121), introduced as H.R. 3365 on October 21, 2003, was passed in the House on October 29, passed in the Senate on November 3, and signed into law by President Bush on November 11, 2003. The act, which provides tax relief for members of the armed forces, improves tax equity for Congressional Research Service ** The Library of Congress

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