A federal policy prevents the surviving spouses of service members from collecting benefits from the Department of Defense and the Department of Veterans Affairs, even though they qualify to receive both.
Instead, husbands and wives of fallen service members effectively must choose between the two sets of benefits, or pass one on to their children, if they have any.
But two bills introduced to Congress this session, The Military Widows Tax Elimination Act of 2019 in Senate and the Military Surviving Spouses Equity Act in the House, could help thousands of Gold Star spouses receive both DoD and VA benefits without having to transfer them to their children.
If the bills pass, Gold Star spouses will not receive retroactive benefits, but begin collecting both sets of benefits after the bill passes, according to the text of the bills.
As of May 13, neither bill had moved out of committee.
Gold Star families who pass the second set of benefits on to their children faced a surprise tax hike as high as 37 percent, or nearly double the previous rate, this year. That increase was because of the so-called “Kiddie Tax” passed as part of the 2017 tax law package. Another Congressional effort would attempt to fix that hardship.
The Gold Star Family Tax Relief Act and its companion bill would amend the tax code to treat Gold Star survivor benefits as earned income and therefore not subject to the Kiddie Tax, effectively repealing it.
Rep Joe Wilson, R-S.C. called the federal policy that prevents Gold Star spouses from collecting both sets of benefits “an unfair penalty that cuts earned benefits to military survivors.”
“Members of our military risk their lives for our freedoms every day. It is unconscionable to think there is a ‘Widow’s Tax’ on the surviving family members of our courageous men and women. We owe it to them to secure stable benefits in the event of their retirement or death,” Wilson said when he introduced the bill in February. “This issue creates a substantial burden for the surviving families, and we must act now.”
There are as many as 65,000 Gold Star spouses nationwide, Sen. Doug Jones, D-Ala., said.
“It is absolutely unacceptable that our federal government refuses to pay the widows and widowers of our nation’s heroes the full benefits they are entitled to, especially those benefit plans for which they have voluntarily paid into,” Jones said in February when he introduced the Senate bill. “No surviving spouse should be faced with this unexpected and completely unfair cut to the benefits they count on in these tragic circumstances. This is a tax on military families who have already sacrificed so much. We are going to work to right this wrong.”