For the year before and the year in which the injury or wound was incurred and resulted in the death of a member of the armed forces or a US government employee because of a terroristic or military action against the US government or it’s allies, the tax liability of the deceased individual is forgiven. Any government with whom the US government has signed treaties and participates with them in a multinational force is considered an ally. Any military action, aggressive and violent, which results in harming the American people or those from the allied countries, is considered a terrorist act.
The only requirement for the terroristic or military action forgiveness is that the terrorist act or military action occurred outside the US. This tax liability forgiveness isn’t only for the military, it also extends to individuals that are employed by the US government and serve their government as civilians. The survivors of these deceased individuals need to file form 1040 plus form W-2 for the year that they pass away. If the tax return was already filed, they need to file form 1040X for that year plus any previous years they are making a claim for a refund. Because the individual’s tax liability is forgiven, the taxes that were paid already at the time of the individual’s death can be recovered.
This forms need to be accompanied by the computations for the individual’s tax liability owed and for the claim of refund for the taxes already paid. The form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer, needs to file with a letter of certification from the Department of Defense or Department of State. This certification should be made on form DOD 1300, Report of Casualty. This statement should have the individual’s name with his/her social security number on there. The statement should verify that the US government at the time of his/her death or injury employed the individual.
You should also include, "KITA" (Killed in Terrorist Action), on top of the returns and the claims plus on the form 1040 and 1040X on the line for "total tax".
