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The Honolulu Advertiser
Posted on: Monday, April 14, 2003

MILITARY UPDATE
Troops can expect better pay, tax relief

Military Update focuses on issues affecting pay, benefits and lifestyle of active and retired servicepeople. Its author, Tom Philpott, is a Virginia-based syndicated columnist and freelance writer. He has covered military issues for almost 25 years, including six years as editor of Navy Times. For 17 years he worked as a writer and senior editor for Army Times Publishing Co. Philpott, 50, enlisted in the U.S. Coast Guard in 1973 and served as an information officer from 1974-77.

By Tom Philpott

On the eve of victory in Iraq, Congress was moving on a couple of fronts itself to reward American troops with pay and tax improvements.

• Tax relief: As Baghdad fell to U.S. forces on April 9, the House passed for a second time this year, but with new Senate-endorsed amendments, the long-awaited Armed Forces Tax Fairness Act (HR 1664).

If the Senate approves, as expected, it would give military members and Foreign Service officers assigned away from home the same tax breaks on capital gains from home sales as enjoyed for the past six years by other U.S. homeowners. More importantly for some, the capital gains protection on home-sale profits — of up to $250,000 for individuals and $500,000 for couples filing jointly —would apply retroactively to sales since May 1997.

The tax bill also would benefit many reservists and Guardsmen by creating new tax deductions, of up to $1,500 a year for lodging and travel expenses when serving and staying over night more than 100 miles from home.

Also the tax bill would make the $6,000 death gratuity paid to military survivors entirely tax free. Now half of it is exempt.

Final enactment is likely this month.

• Deployment pay: The Senate April 2 surprised House colleagues with two initiatives that would pump more than $500 million into the paychecks of deployed service members. These could face a tougher test winning passage than the tax breaks.

The Senate voted to increase imminent danger pay from $150 a month to $225. It now is paid to more than 250,000 service members in Iraq, Kuwait, Kosovo, Bosnia, and other areas of higher risk.

The Senate also voted to boost family separation allowance paid to service members deployed from home for more than 30 days. The monthly allowance of $100 would be raised to $250. Both increases would be retroactive to Oct. 1, 2002.

The House bill contains no such provisions so a House-Senate conference committee will have to decide whether the initiatives survive.

Questions, comments and suggestions are welcomed. Write to Military Update, P.O. Box 231111, Centreville, VA 20120-1111, or send e-mail to: milupdate@aol.com.