IRS clarifies tax breaks for 9/11 responders

The Internal Revenue Service has updated publications on tax relief for victims of terrorist attacks, making it easier for 9/11 responders to apply for the little-known tax breaks.

Weeks after the 9/11 attacks, Congress passed the "Victims of Terrorism Tax Relief Act of 2001," which said that disability benefits given as a result of illness or injuries linked to 9/11 and two other U.S. terror attacks are not taxable. And, the law said, if someone died as a result of a terrorist attack, his family is entitled to a minimum tax refund of $10,000.

But the IRS never updated its publication to explain the benefits and many World Trade Center responders were unaware of them or confused about whether they were eligible.

After Sen. Kirsten Gillibrand (D-N.Y.) received several inquiries from 9/11 responders, she called IRS Commissioner John Koskinen to urge the agency to clarify who is eligible.

Last month, the IRS updated the publication and created a Web page explaining the benefits.

"Sadly, thousands of our injured and sick heroes and the families of the dying faced unnecessary obstacles and are unaware of their right to tax relief they are owned," Gillibrand said in a news release.

Benjamin Chevat, executive director of 9/11 Health Watch, said the change will mean "real money to real people."

The benefits, detailed in IRS Publication 3920, apply to victims, survivors and some dependents of those killed during the Sept. 11, 2001, attacks, the 1995 Oklahoma City bombing, and the 2001 anthrax attacks.

Disability payments, including Social Security Disability Insurance payments, aren't taxable if they are for injuries or illnesses contracted directly from one of those attacks.

And federal income tax liabilities for people who died from injuries or illnesses related to Sept. 11, Oklahoma City or the anthrax attacks are forgiven.

Income tax is forgiven going back to 2000 (1994 for victims of the Oklahoma City attack) whether a person was killed in an attack, died later because of an attack or by participating in rescue or recovery operations.

A minimum of $10,000 in relief is provided if the deceased person's total tax forgiveness is less than $10,000.

The regular statute of limitations on tax returns and tax refunds applies, which means a person has three years to file a refund claim. For most people, that means 2011, 2012 and 2013 returns.

One 9/11 responder, a former New York City Department of Transportation manager on disability from a group policy for 9/11-related illnesses who asked not to be named, said he was initially denied the tax break. The clarification has meant he has gotten several thousand dollars back in refunds. Just as important, he said, "it has meant something to have the whole tax thing corrected."

To get an overview of the benefits, go to: irs.gov/Individuals/Tax-Relief-for-Victims-of-Terrorist-Attacks

For a copy of publication 3920, go to: www.irs.gov/publications/p3920/ar02.html

Or you can call an IRS hotline at 866-562-5227.