Gold Star families desperate for tax fix as Congress returns from recess

It was a Sunday afternoon in late February when Jessica Braden-Rogers received a call from her tax preparer telling her there was an "issue" with her taxes that would cost her thousands of dollars.

The issue centered on a change in the taxation of survivor benefits that her 9-year old son received from the government. Her husband, Capt. Michael Braden, was killed during a deployment to Afghanistan in 2012 -- his 15th tour of the Middle East. Their son, who was just 2 years old at the time, had been taxed a little over $1,000 each year on the benefits he received due the loss of his father.

But when President Donald Trump signed into law the new tax bill in late 2017, certain benefits for children were re-defined as "unearned income" and therefore were subject to higher tax rates. In Braden-Rogers's case, her son would now owe nearly $4,500, quadruple the amount from the previous year.

Since then she's lobbied for a fix to the tax and watched legislation get approved in both chambers of Congress, but the bill never made it to the president’s desk. Now with Congress returning from August recess, she said her family and other Gold Star families -- families who have lost military service members -- are desperate for Capitol Hill to pass the fix before they face another tax season.

Reeling from her tax issue, Braden-Rogers soon found out that she was not the only one unexpectedly impacted. She noticed on social media pages that other Gold Star families were just as shocked by the law, referred to as "the kiddie tax."

"That very well could have paid for all of [my son's] braces," Braden-Rogers told ABC News this week about the $4,500 in taxes she paid on her son's survivor benefits last year.

The Pennsylvania social worker has lobbied Congress for the Gold Star Family Tax Relief Act, which would tax survivor benefits as earned income, instead of unearned income. The Senate unanimously passed the narrow fix to alleviate the burden on Gold Star families in May, which was followed by a broader House fix days later. However, the legislation never got to Trump's desk.

The House version of the bill was included in the Setting Every Community Up for Retirement Enhancement Act of 2019, a larger retirement bill, which meant the Senate would also have to approve its version of that bill for the tax fix to take effect. But procedural hurdles have stalled the bill in the Senate.

Some Senate Republicans are demanding a floor debate because they disagree with elements of the SECURE Act. For example, Sen. Ted Cruz, R-Texas, wants to restore a provision that would help cover homeschooling expenses.

In a statement to ABC News a Cruz spokesperson said, "The Senate can and should act for the benefit of Gold Star families while also benefiting school kids all across the country, including students with disabilities, public school students, and homeschool students. Sen. Cruz will continue working with his colleagues to achieve both the Gold Star families tax fix and the expansion of 529 plans in the retirement bill."

The other route would be for the House to call up the Senate's bill from the suspension calendar and pass the narrower fix that would then be signed by the president.

In a statement from Sen. Pat Toomey's office, indicated the House could easily provide relief to the Gold Star families by voting on the legislation that the Senate approved in May.

"Instead, House Democrats are playing politics with the issue and using the Gold Star tax fix as a bargaining tool to pass their comprehensive re-write of our nation’s retirement savings," the Pennsylvania senator's office said in the statement.

Braden-Rogers estimates she's spent hundreds of hours trying to move the bill forward, including speaking and emailing with dozens of senators, representatives and congressional staffers on both sides of the aisle. She said she's spoken to staff from the offices of Senate Majority Leader Mitch McConnell, R-Ky., Sen. Chuck Schumer, D-N.Y., Sen. Lindsey Graham, R-S.C., and Sen. Bob Casey, D-Pa., and met with staff from the offices of Cruz and Toomey.

"They need to pass the legislation -- point blank," Braden-Rogers said. "They need to put aside the partisan politics that this has turned into, and think about Gold Star families who are really suffering because of this tax plunder, if you want to call it that."

Despite Braden-Rogers concerns, Toomey's office was optimistic the issue would be fixed by the end of the year, and that the fix would be "retroactive," putting money back into the pockets of Gold Star families.

ABC News' Mariam Khan contributed to this report.