[ The Real McCoy Online Home ]                                                                                                                       August 8, 2008

New law opens up tax stimulus rebate checks to more military families

Married members of the military may receive economic stimulus payments this fall, even if their spouses or children donít have Social Security Numbers (SSN), following the newly-enacted HEART Act (Heroes Earnings Assistance and Relief Tax Act of 2008). Prior to this new legislation, some members of the military did not receive stimulus payments, or received a reduced amount, due to the absence of a SSN for a spouse or child.

Combat pay can count for stimulus rebates

For federal tax purposes, the U.S. armed forces includes officers and enlisted personnel in all regular and reserve units controlled by the Secretaries of Defense, the Army, Navy and Air Force. The Coast Guard and National Guard also are included, but not the U.S. Merchant Marine or the American Red Cross.

Normally, combat pay is not counted as income and is not taxable. For the purposes of receiving an economic stimulus payment, however, military personnel serving in combat zones have the option of including their nontaxable combat pay on their 2007 or 2008 income tax returns if it helps their eligibility for the 2008 economic stimulus payments.

To receive the stimulus payment this year, combat zone personnel or their spouses must file a 2007 income tax return by Oct. 15. Otherwise, they can claim the economic stimulus payment on next yearís income tax return.

Military personnel who normally would not file an income tax return because their 2007 income is not taxable can file a simple Form 1040A with the Internal Revenue Service (IRS) if they want to receive the economic stimulus payment.

They should report their nontaxable combat pay on Line 40b of Form 1040A to show at least $3,000 in qualifying income.

The Department of Defense lists the amount of excluded combat pay, along with the designation, "Code Q," in Box 12 of Forms W-2.

The IRS has developed Package 1040A-3, a publication containing tax tips, a sample Form 1040A and a blank Form 1040A. The package contains everything needed to file the return immediately.

In November, the Treasury will send checks and direct deposits to military families who qualify for these stimulus payments.

The Internal Revenue Service (IRS) estimates that there are more than 10,000 military families who will receive the additional stimulus payments.

A specific time frame for the payments will be announced later this year.

"The IRS wants to make it as easy as possible for military families to get the stimulus payments authorized by the new law. People who already have filed donít need to do anything else to get their money. Weíll do the rest," said IRS Commissioner Doug Shulman. "We will work as quickly as possible to put these new provisions in place while making sure the rest of the stimulus payment program continues smoothly through the summer and fall."

To get a stimulus payment, eligible taxpayers must file a 2007 tax return. For married couples who already have filed a joint return, no further action is necessary. Generally, married couples qualify for an economic stimulus payment of up to $1,200, plus an additional $300 for each qualifying child younger than 17.

Because of the special challenges involved in making these newly authorized payments, the IRS is taking the additional step of working with the Department of Defense to ensure that eligible filers get their money.

"The IRS wants to make it as easy as possible for military families to get the stimulus payments authorized by the new law."

Doug Shulman,
IRS Commissioner


Originally, the Economic Stimulus Act of 2008, enacted in February, barred economic-stimulus payments to anyone filing a return who did not have a SSN. 

Returns using any number issued by the IRS, such as an individual taxpayer identification number were not eligible. For joint filers, this meant that both spouses must use valid SSNs.

Those barred by the original law from receiving a stimulus payment included military members filing jointly with spouses who were ineligible to get a SSN. In addition, because they were not eligible for stimulus payments, they could not receive an additional $300 payment for each eligible child.

Married couples filing joint returns who now are eligible for stimulus payments under the new law will receive a notice from the IRS telling them the amount of their payment and the date it will be issued. Payments will be made by check or direct deposit.

Those who chose direct deposit for their regular tax refund will typically get their stimulus payment by direct deposit.

However, anyone who chose a refund-anticipation loan, had tax-preparation fees deducted from their refund or entered into other refund-related transactions, will get a check, instead.

The payments are based on 2007 income tax returns, including basic returns filed by eligible low-income people, solely to claim a stimulus payment.

Those who have not yet filed, including members of the military who received nontaxable combat pay, should do so as soon as possible.

For more information, visit the Web site http://www.irs.gov or in the Fort McCoy community, military-eligible personnel can call (608) 388-2165.

(Stories submitted by the Internal Revenue Service.)


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