Fix on the way to help Gold Star families facing unexpected tax hike

Posted at 5:02 PM, May 24, 2019
and last updated 2019-05-24 18:21:02-04

VIRGINIA BEACH, Va. - A fix is on the way to provide relief to Gold Star families facing an unexpected tax increase, Rep. Elaine Luria said on Friday.

She's helping to lead an effort in Congress to undo a provision of the tax bill that was signed into law in 2017. The IRS began handing survivor benefits paid to children like stocks or inheritances. Luria says that was an "unintended consequence."

Due to how benefits are paid out, surviving spouses will often sign benefits over to their children. The law caused some of those benefits to be taxed as much as 37%, a large increase. Some families had to pay thousands of dollars they weren't expecting to pay.

"It's heartbreaking," Luria said. "I had a group of Gold Star spouses, who are all widows from the Virginia Beach area, tell me their stories."

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Luria's bill would reverse the change and retroactively help the families get the money back. It passed the House, and a similar bill passed the Senate. Luria is confident both chambers will pass the same bill once Congress returns to Washington from its Memorial Day break.

"I think this is one very small thing we can do to try to help making them whole financially based off of a piece of unintended legislation," she said.

Luria made the comments during a visit of the Hampton Roads Armed Services YMCA in Virginia Beach, a center providing services and support for military members and their families.