IRS has breaks for gulf vets

Sylvia Porter

March 26, 1991|By Sylvia Porter | Sylvia Porter,Los Angeles Times Syndicate

In the Persian Gulf area, tens of thousands of servicemen and women are still standing guard until the Arab world is stabilized. Though the war is over, they have not come home and, for most of them, no date for their return is firm.

For these troops and their families, the re-entry to civilian life will not be as problem-free as it looks in welcome-home ceremonies on television. They may be met by missed mortgage payments, overdue bills and lost employee benefits.

Fortunately for some, a majority of large corporations (but, strangely, not all) have gone beyond legal requirements to preserve the family security of active duty reservists. Pay or partial pay has been continued; life insurance and medical benefits maintained; pension rights retained.

Just as some employers are expressing their appreciation to the Persian Gulf forces, so is the Internal Revenue Service. Service people in the gulf and those who have returned home this spring will not have to meet the April 15 deadline for filing personal income taxes.

To reward those in the gulf war, the government has made a number of provisions to ease the transition to peacetime. The editors of Bender's Federal Tax Service have reviewed the tax benefits available to troops and their families. Highlights:

* Service people who were involved in Operation Desert Shield or Desert Storm -- or still are -- may file their taxes for 1990 up to six months after they return from the combat zone. This extension is available automatically to members of the armed forces and to citizens who provided services overseas in support of the military. The extension also is available for those who have been hospitalized as a result of combat duty. For details on benefits that the extension covers, 1-800-829-3676 for information.

* Anyone qualifying for relief must write the words "Desert Storm" at the top of all correspondence with the IRS, including tax returns, collection notices and envelopes.

* Combat pay received by enlisted personnel in the area designated as the "combat zone" is exempt from income tax. The exemption for commissioned officers is limited to $500 a month.

* For married people filing a joint income tax return: Both spouses qualify for the extension even if only one remains overseas. The spouse at home can obtain power of attorney without a signed authorization, as long as there is a written bTC explanation that the other spouse is still stationed in the combat zone. For married people filing separate income tax returns: Only the spouse who is in the combat zone qualifies for the extension.

* Normally, when you sell a house, you must buy a new house within two years before or after selling the old one to postpone paying tax on capital gains on the sale. If you have been on extended active duty -- defined as a call-up for more than 90 days -- you will be given two extra years to replace your residence and still postpone your capital gain.

* Reservists called to active duty do not receive all of the same benefits provided to regular military personnel. If you are a reservist, check with your tax professional to see which benefits apply to you. Some family, uniform, quarters and subsistence allowances will be provided. Special pay for foreign or hazardous duty outside the combat zone is subject to tax, as it is for regular military personnel.

* Reservists and regular military personnel on active duty will qualify for deferment of payment of back taxes, without interest, if their ability to pay has been materially impaired (that is, if their income has dropped as a result of going into military service). If you cannot meet the tests for this, the IRS usually will grant a reduction of interest to the 6 percent rate on tax liabilities that arose before you entered active service.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.