After the death of a loved one, taxes might not be on your list of things to think about. However, your loved one may be entitled to certain benefits, including tax forgiveness. Here are answers to some common questions about tax liability and forgiveness.
Under what circumstances can a deceased service member's tax liability be forgiven?
Tax liability is the entire sum of the money you pay annually in taxes to the federal government. This can be forgiven or refunded if a service member dies under any of the following circumstances:
- While on active duty in a combat zone
- From wounds, disease or other injury received in a combat zone
- From wounds or injury incurred in a terrorist or military action
Which tax years are forgiven?
This varies based on the circumstances of the death:
- For combat zone-related deaths — The Internal Revenue Service forgives the service member's tax liability for the tax year in which the death occurred and any previous tax years ending on or after the first day of active duty in a combat zone. Any remaining unpaid taxes from previous years are also forgiven.
- For deaths outside a combat zone, but in direct support of military operations — The same forgiveness benefits apply as those for combat zone-related deaths.
- For terrorist or military action related-deaths — The Internal Revenue Service forgives the service member's tax liability for the year in which the injury occurred (even if death occurs in a separate year) and one year prior. So, a service member who dies in 2015 from injuries sustained in a 2014 terrorist attack could receive tax forgiveness beginning in 2013.
How does tax forgiveness affect joint filing?
- If you and your spouse typically file jointly, forgiveness or refund only applies to the deceased service member's portion of your tax liability.
- When you submit a claim for tax forgiveness, you'll need to determine the portion of your joint tax liability for which the service member would have been liable if a separate return had been filed.
How can I submit a claim for tax forgiveness?
Tax forgiveness isn't automatic, so you'll need to submit a survivor's claim:
- If the tax return has not yet been filed, file a Form 1040 with the service member's W-2.
- If the tax return has already been filed, file a separate Form 1040X for each year in question.
You can identify your claim by writing one of the following on the total tax line on Forms 1040 or 1040X:
- Iraqi Freedom-KIA
- Enduring Freedom-KIA
- Kosovo Operation-KIA
- Desert Storm-KIA
- Former Yugoslavia-KIA
If the service member was killed in a terrorist action, write KITA on the front of the return and on the line for total tax. You'll also need to include:
- A computation of the decedent's tax liability
- Form 1310: "Statement of Person Claiming Refund Due a Deceased Taxpayer"
- A death certificate or equivalent from the Department of Defense or the Department of State
Military OneSource MilTax consultants can provide free information about your tax situation. You can also access free tax preparation and e-filing services through Military OneSource by calling toll-free 800-342-9647. OCONUS/International? Click here for calling options.
You also have the option of reaching out for assistance with tax preparation concerning your loved one through the judge advocate office closest to you or to request financial counseling through your service's long-term survivor care program:
- Army Survivor Outreach Services
- Marine Corps Long Term Assistance Program
- Navy Gold Star
- Air Force Families Forever
- Coast Guard Gold Star Program