Today, the House of Representatives passed a bill Rep. Rick Larsen (WA-02) introduced with Rep. John Carter (TX -31) to protect survivor benefits for children of servicemembers who have died.

“Today the House of Representatives stood up for children of servicemembers who have died. Survivor benefits are not unearned income, but earned through sacrifice and loss,” said Larsen. “This bipartisan fix to the tax code honors the sacrifices of servicemembers by treating their families fairly.”

“We’ve heard the heartbreaking stories of Gold Star families forced to pay exorbitant taxes on survivors benefits because they’ve been treated as unearned income,” Rep. Carter said. “This language will right an unfortunate wrong, and ensure that in the wake of a tragedy, military families are not facing additional tax burdens. These families have lost a loved one, and it’s the federal government’s responsibility to honor that sacrifice. I’d like to sincerely thank my friend, Congressman Larsen, for his partnership on this incredibly important issue to our military families.”

Larsen introduced the Children of Fallen Servicemembers AMT Relief Act with Rep. John Carter (TX -31). The bill changes tax law to count a Survivor Benefit Plan annuity paid to a minor beneficiary as earned income for the purposes of the Alternative Minimum Tax (AMT). Larsen’s bill was included in a larger package that also fixes a provision of the 2017 Republican tax bill that increased income tax rates for children’s survivor benefits.

Larsen learned of these issues with the tax code after he met Michelle Bartz at a town hall on veteran’s issues Larsen hosted in Bellingham. Michelle’s husband, Lieutenant Colonel Paul Bartz, was killed in action in Afghanistan after more than 20 years on active duty. After Michelle transferred survivor benefits to their son, she learned the tax code treats this annuity as a child’s “unearned income,” counting towards the AMT. As a result, their son had to pay an AMT penalty in addition to income tax on the survivor benefits from his father.

“I will work with my colleagues in the Senate to get this change enacted into law for the Bartz family and other Gold Star families,” said Larsen.

###