This week the Heroes Earnings Assistance and Relief Tax, or HEART, Act was signed into law.
It continues or adds several tax breaks for members of the military. They include allowing combat pay to be counted in figuring the Earned Income Tax Credit; permitting some penalty-free withdrawals from retirement accounts; and easing access to unspent amounts held in health flexible spending arrangements.
The new law also will make it easier for thousands of active-duty military families to qualify for the economic stimulus payment. Previously, some families were denied economic stimulus payments because one spouse is an immigrant and does not have a social security number.
In addition to helping out service personnel, the HEART Act also makes it tougher for individuals who leave the U.S. simply to lessen their tax bill. And it creates stricter treatment of foreign contractor employment tax-avoidance efforts, such as instances where some defense contractors set up overseas offices to avoid paying Social Security and Medicare taxes.
You can read more about the HEART Act service personnel provisions in this Memorial Day blog post, and more about the expatriate tax measures in this post about the closing of the overseas tax escape door.
