Usually, when you move to a new state, you become a resident of that state. Then you pay the taxes as residents of the new state.
However, if you are the husband of a member of the army, you are subject to special rules. The Military Spouses Residency Relief Act (MSRRA) allows you to maintain the same legal residence status as the spouse who is a member of the service. As a result, many states and tax offices will not charge you when your spouse goes into military service.
The spousal residency rules state that, if you are the spouse of a member, you do not lose or obtain a state of residence or residence for tax purposes when you move. This is only valid if these conditions are met:
1. Go with the service member in a destination state outside his home country because of military orders.
2. You are in the duty state only to be with the service member.
If you meet these conditions, this law will not collect tax on your income as long as you are in the duty state. However, your country of origin can still collect income tax from you. Also, the duty state cannot tax your property.
Therefore, if the requirements of the Spouse's Residence Assistance Act are met, military income and military spouse's income will not be taxed in the state of duty. Both spouses are subject to taxes (income and property) in the countries of origin.
You may have heard about the spousal residency law, a rule that helps military spouses. But what is it, and what does it mean and what does it do? Does it exist? Thanks to a lawyer and tax expert, we have the answers.
A little in the life of a military spouse is more confusing than trying to find out exactly where you are. More than just an initial conversation, the answer can dictate a world of decisions, especially regarding the place of registration of your car, the area of voting in the elections and, in particular, the place of tax declaration.
This is where the legislators come in. A federal law, the military law on the adjustment of spouses, aims to facilitate the response to the application for residence and taxes. On the other hand, a cause of widespread confusion is often famous.
A 2019 update of the rule is intended to address this problem.
First, military spouses must understand the definitions of specific legal and military terms.
A house is a legal term that can be described as "home". According to the concept of the state tax system, each person can only have one address at a time. Your address may be where you own the property, registered your car, got a driver's license, registered to vote or for a variety of other official transactions that connect you to a specific location. An address changes when these formal connections are established in a new location.
While a residence is simply the place of residence or the address you are currently using. A military spouse may reside in Virginia, for example, because all of the legal documents originate here, but he lives physically in North Carolina. Your home changes depending on your residential location physically.
And then there is the home of record. A term used by the Ministry of Defense to describe the military, the home of record is where he lived when he joined the army. It is used to determine certain military rights, including the final tasks of a permanent change of station (PCS). As a general rule, it is permissible to modify a registration box only if there is an error in the original documentation at the time of registration.
The Military Rescue Act (MSRRA), approved for the first time in 2009, allowed military spouses to claim, for tax purposes, the same state of residence as their military, provided they also establish their home over there.
This means, for example, that a military spouse who earned income in North Carolina but had an address with his wife in Virginia would be subject to the laws of Virginia rather than the tax laws of North Carolina.
The law was intended to simplify the filing of family taxes by allowing spouses and their services to file taxes in a state.
The rule also excluded many couples. All military spouses are not domiciled in the same place as the current member. This means that many families still had to apply in different states, despite their willingness to help.
We come now to new things. Due to the update of the law, spouses of military members may elect to file tax returns in the member's state of residence, whether they have lived or not.
Beginning in the fiscal year 2018, military spouses may file taxes in the same state as their military member, who requests the same address without changing the status. Alternatively, they may also choose to present themselves in the state in which they have defined their address.
This change can significantly simplify the lives of many military spouses who want to manage a single set of tax forms for their families. It may also mean that spouses pay lower taxes if the home state has lower tax rates or favorable laws for members living outside the country.
This means that the changes to the law regarding residency assistance for military spouses do not mean
First, the MSRRA does not allow military spouses or members of its services to arbitrarily choose a suitable state in which they have never established a link.
This means that even if a person is tempted to proclaim a state without the obligation to pay his or her income tax, like Florida, doing so without creating real bonds can eventually lead to boiling water.
And those who earn money when posted abroad cannot use MSRRA protections to avoid paying state taxes. The state of residence in the house will try to collect taxes on that rent.
Even if the spouses could get back thousands of dollars if they paid taxes in a state in 2018, but now they intend to claim their home in another state. Because of the change, it could be very complicated to get the state's repayment.
"In short, this scenario is not for the faint of heart."
A spouse can file a non-resident return in the state where he paid the taxes to claim the refund. They must also file a return in the newly requested state and make a payment.
If the states have different conditions, the spouse must pay taxes in one state pending the return of the other, but only to know that he must pay the income tax later for the amount returned. And if the state or tax software used by the husband did not update its modules to reflect the new law, the situation could become even more difficult.
And then, it's a problem of employers and wage ministries. Since most employment documentation forms do not include the possibility of identifying a state of residence beyond the physical address of residence, spouses must work closely with human resources departments to ensure that they meet the requirements of the state.
Valderas Financial Solutions LLC