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Managing America; Taxes

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Week Ending November 9, 2007

H.R.3997 To amend the Internal Revenue Code of 1986 to provide earnings assistance and tax relief to members of the uniformed services, volunteer firefighters, and Peace Corps volunteers, and for other purposes.

Tax credits for military, volunteer firefighters and Peace Corps volunteers are given special tax consideration in this bill.

Military Personnel

Military personnel may elect to include combat pay as earned income for the purposes of claiming an earned income tax credit.

Mortgage bond authorization intended to finance residences for veterans is extended and increased from $25 million to $100 million. Veterans must have served on active duty and applied for the financing within 25 years after the last date of military service.

Death benefit trust plans are qualified to provide additional benefits to survivors if, in the case of a participant who dies while performing qualified military service, the participant returned to employment under the benefits and then terminated employment on the account of death. Employers sponsoring a retirement plan may treat the individual who dies or becomes disabled while performing military service as though the individual had resumed employment.

Any differential wage or payment, money paid to an employee while the employee is performing military service will be treated as payment of wages.

Death benefits can be rolled over into a Roth IRA from another retirement account or for educational purposes to a Coverdell educational savings account without restrictions but with some amount limitations.

Volunteer firefighters and emergency medical responders.

Qualified state and local tax benefits, a reduction or rebate of a State or local tax due to performance of services, is not to be considered part of the individual’s gross income. The amount covered under this provision shall not exceed $30 times the months during each year that the individual performed the emergency service.

Covered are individuals in a volunteer organization that is organized and operated to provide firefighting or emergency medical services.

Peace Corps Volunteers

The five year tax period governing property of an individual or spouse serving outside the US on qualified official extended duty as an employee, volunteer or volunteer leader of the Peace Corps can be suspended.

Supplemental Security Income

Payments to or on behalf of a member of the uniformed services for housing on a facility shall be treated as support and maintenance.

Blind Veterans

State annuities for blind veterans will be disregarded when determining supplemental income benefits taxations.

AmeriCorp Benefits are to be excluded when determining supplemental income eligibility and benefits amounts.

Sponsor:  Rep. Charles B. Rangel (D-NY-15^th)

Vote: Passed House 410 to 0 November 6, 2007 RC 1042

Cost to the taxpayers:

Earmark Certification:   Not applicable to this bill.

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