MILITARY UPDATE
Congress moves to aid troops
By Tom Philpott
The more difficult U.S. operations become in Iraq, the more conscientious Congress becomes in addressing weaknesses and inequities in military pay and benefits programs, or so it seems.
Three days after insurgents downed an Army helicopter, killing 16 U.S. soldiers and injuring 24, Congress passed tax relief legislation for military families.
Two days earlier, as part of an $87 billion supplemental bill for military operations and reconstruction in Iraq, Congress also voted to:
• Extend wartime improvements in family separation allowances and imminent danger pay through September 2004. Lawmakers rejected, for now, a Bush administration plan to roll back the FSA and IDP increases for at least an equal increase in hardship duty pay targeted only at military members while serving in Iraq and Afghanistan.
• Improve healthcare benefits for both mobilized reservists and National Guard personnel and for drilling reservists who are otherwise unemployed or without employer-sponsored health insurance.
Highlights of the Military Family Tax Relief Act of 2003 (H.R. 3365), which President Bush is expected to sign soon, include:
• Reserve travel deductions: Drilling reservists and Guard members will be able to claim as tax deductions any unreimbursed costs for meals, lodging and transportation when on duty and staying overnight more than 100 miles from home. Such deductions had been allowed only if reservists itemized on tax returns and out-of-pocket travel costs exceeded 2 percent of adjusted gross income. The change, retroactive to Dec. 31, 2002, will allow reservists to take above-the-line deductions from gross income. The tax savings overall is estimated at $850 million over 10 years.
• Capital gains on home sales: Service members and foreign service officers will receive relief from a residency rule that has prevented them, since May 1997, from sheltering from taxes up to $250,000 ($500,000 for married couples) in capital gains from home sales.
• Death gratuity: The military's $6,000 gratuity to survivors is raised to $12,000, and all of it — not just half — is tax free. The change is retroactive to Sept. 11, 2001, and costs $122 million over 10 years.
• Tax-free homeowner's assistance: Under the Homeowner's Assistance Program, service members are reimbursed for declines in home values from base closings and realignments. HAP payments have been taxable. Future payments will be tax-exempt, an important change for the next round of base closures to begin in 2005. The estimated savings is $22 million over 10 years.
• Tax filing deadline: Military personnel in combat zones can delay filing tax returns. The extension rules now will apply for any contingency operation designated by the secretary of defense.
• Reserve health benefits: Senators led the full Congress, over administration objections, to open TRICARE to some reserve forces on a one-year test basis.
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. Or visit Tom Philpott's Web site.
