The families of America's fallen military service members would no longer have survivor benefits taxed at Alternative Minimum Tax (AMT) rates designed for the ultra wealthy, under a relief bill introduced in the U.S. House of Representatives last week by Congressman John Carter (R-TX31), Co-Chairman of the House Army Caucus.
"Allowing the IRS to take up to 26 percent of the death benefit away from the families of those who gave their lives for this country is just not right," Carter said. "These benefits should be taxed only as earned income, not subject to any punitive taxation. In this time of war on two fronts, we need to scour every detail of how we treat our soldiers and families to ensure they receive the respect and support they deserve, especially for the families of those who have made the ultimate sacrifice."
Current tax law treats annuities from the Uniformed Services Survivor Benefit Plan as unearned income, making the payments subject to higher tax rates under AMT. Carter's legislation, the Children of Fallen Warriors AMT Relief Act (HR 5529), a companion bill to S. 3334 by Senator Richard Burr (R-NC), would re-designate the benefits as earned income under normal tax regulations, eliminating the punitive AMT rates.
The bipartisan bill currently has 14 co-sponsors.