By Veterans Transitional Services

Congress recently made some changes that may provide some tax breaks for military personnel and their families.

1. Disabled retired veterans now have one year to file for a refund as a result of the government reclassifying part of their taxable retirement pay as tax-free disability. This relief is retroactive. Refund claims for reclassifications made after December 31, 2000 can be filed with the IRS before June 2009.

2. Military death gratuities can now be rolled over to Roth IRA's or Coverdell education savings accounts. This also applies back to payments for death from injuries that occurred after October 6, 2001.

3. Bonus payments made by states to service members are tax free. This change is for all open tax years. So anyone who paid income tax on these payments can file a claim for a refund with the IRS

4. Rebate rules for soldiers are being eased. If one spouse is a member of the armed forces during the year, there is no longer the rule that both spouses must have a valid social security number in order to get a rebate. The IRS will be changing its systems and begin issuing rebates that before this change they were not doing.

5. If you are reservists who is participating in your employer's Flex plan you can have the unused amount in the plan paid out to you if you are called to active duty. This new provision allows you not to forfeit the money that you have set aside in the health flex plan. Please note that this change is optional on the part of the employer as there is nothing that forces them to make the distribution.

The information here is provided to give you a brief overview of some recent changes that may help you, but it is not complete nor is it tax advice. VTS recommends that you consult with your own tax professional and ask them if you can take advantage of any of these changes.