This is one of those things nobody wants to deal with. I don’t remember ever learning about it in tax school (I take update and continuing education classes every year). I don’t remember hearing a thing about it when I took the “Military Taxpayer” class which specifically targeted all sorts of military tax issues. I actually learned about it doing research on something else and landed on the wrong page of a document. It seemed like this information should be shared. If you need to be reading this, I am sorry about your loss.
Tax liability can be forgiven if a member of the US Armed Forces dies while in active service in a combat zone. This also includes death from wounds, disease, or other injury received in a combat zone or incurred in a terrorist or military action.
In addition, any unpaid tax liability at the date of death may be forgiven. When a liability is forgiven, it means that the debt doesn’t have to be paid.
If you’re filing a tax return (or amended return) you will have to identify that you will be claiming tax forgiveness by writing across the top of the tax return:
“Iraqi Freedom-KIA” or “Enduring Freedom-KIA”
If the soldier was killed in a terrorist action, write “KITA”. You will use the same phrase that you wrote across the top of page 1 on the line of your tax return for the total tax. On a 1040 that’s line 61.
You will need to attach the following documents to your return:
- Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer, here’s a link for that form: http://www.irs.gov/pub/irs-pdf/f1310.pdf
- A certification from the Department of Defense or Department of State (form DD 1300 for military and department of Defense employees)
- You will also need to include a sheet that shows how you computed the tax liability to be forgiven. If you have a joint return, only the soldier’s debt is forgiven, not the spouse’s.
Military tax forgiveness returns need to be mailed to a special address. This is not something that can be e-filed.
Internal Revenue Service
333 W. Pershing, Stop 6503, P5
Kansas City, MO 64108
You can get more detailed information on this issue by reading IRS Publication 3: Armed Forces’ Tax Guide. Here’s a link to the book: http://www.irs.gov/pub/irs-pdf/p3.pdf The information you need starts on page 20.
The new deadline for eligible service members to apply for Retroactive Stop Loss Special Pay (RSLSP) is closing in. The date has been extended to December 18 and the law requires that it not be extended again.
What is Stop Loss? Stop loss is basically when service members’ terms of duty were involuntarily extended. A bill passed in 2009, called the War Supplemental Appropriations Act, authorized a retroactive stop loss special pay of $500 for every month or partial month served in stop loss status. If your service was involuntarily extended between 9/11/2001 and 9/20/2009 you may be eligible.
In order to receive the stop loss pay, you must submit a claim. The average benefit is $3,700.
For more information, check out the Defense Department website: http://www.defense.gov/home/features/2010/0710_stoploss/
Or you can call your specific military service branch:
Marine Corps: 877-242-2830
Air Force: 800-525-0102
Who is eligible: Active or Reserve military members who experienced “stop loss” or the survivor of a service member who did.
This is money that the government owes our military members for service to our country. The only way to receive Retroactive Stop Loss Special Pay is to submit an application by December 18th. If you think you might qualify for stop loss pay, please contact your service branch office to learn more and begin the RSLSP claim process. If you know anyone who you think might qualify for RSLSP, please contact them and encourage them to apply.