Trump's 'Kiddie Tax' cost Gold Star families thousands more in taxes

Elizabeth Howe
April 26, 2019 - 11:53 am

Photo courtesy of EJ Hersom | DVIDS

Gold Star families faced thousands in additional tax expenses this tax season thanks to a new "Kiddie Tax" that taxes the unearned income many Gold Star family children receive. 

Navy helicopter pilot Landon Jones was killed over the Red Sea in support of Operation Enduring Freedom in 2013. His two sons, Anthony and Hunter, have been receiving survivor benefits ever since. But with the new tax policy, those benefits won't go nearly as far to support the family as they have in years past. 

"When I saw the tax bill, I was shocked at how much these boys owed on benefits that were given to them," single mother Theresa Jones told CBS

Surviving spouses cannot receive both Veteran Affairs benefits and Department of Defense benefits at the same time — so many pass along the Department of Defense benefits to dependents. As children, however, Anthony and Hunter were affected by the "Kiddie Tax," which can take as much as 37 percent of earned benefits. 

For the Jones family, that meant a $5,400 tax bill on the $15,000 in benefits the boys received last year — a $4,300 increase from last year. 

"We got lumped into that and somebody had said to me, 'Welcome to the top four percent.' I said, 'My 5-year-old is not top four percent,'" Jones said.

Jones is far from the only surviving spouse facing these steep increases. The Treasury Department told CBS it was "evaluating what can be done to solve this issue." In the meantime, Gold Star families may have to find a way to stretch their survivor benefits in order to survive. 

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