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Posted by Pat Raskob

Military Spouses Residency Rules

Military Spouses Residency Rules

When your spouse serves in the military, you've signed for a lifetime of sacrifice, service, and commitment. It's a lifetime of constant calls to service within and outside the country. While such instability is already part of a soldier's lifestyle, it comes with a lot of confusion for their spouses, one of which is, "with constant movements, where do I file my taxes?"


With the huge price, you and your spouse have to pay in defense of the country comes certain fringe perks and benefits. One of them is the Military Spouses Residency Relief Act (MSRRA), a special rule that allows a person married to a military service member to keep the same state of domicile as the spouse. The rules do not just solve tax problems alone but also addresses issues on voting and residence.


The norm is that when you relocate to a new state, you automatically start filing taxes as a resident of that new state. But a military service member is hardly permanently located in one state. As a military service member spouse, the MSRRA allows you to keep the same domicile state as your spouse to prevent being taxed by multiple states when your spouse frequently relocates.

 

This means that a spouse can claim the same state of domicile of a service member for taxation and won't have to be bothered about new tax laws whenever the service of the partner is required in another state. The law allows the spouse to keep a tax domicile as long as the marriage lasts, wherever the spouse goes with the military service member.


So if a military spouse has already established residence or domicile with the partner in Georgia, but for military duty, moves with the service member to New York, and earns income there, the income tax laws of Georgia, and not New York, would apply. And the same applies if the spouse moves (with the partner) to any other state.


The rules include that you have to be legally married and have established a domicile in your home state. The service member must be on military duty in the new state, while the spouse must be in the state primarily to live with the servicemember. The benefits are still valid if the service member is deployed on an emergency operation that prohibits the spouse from following the partner from the new state.


Before 2018, the spouse had to establish residence with the service member in the domicile state to benefit from the rules. But since 2018, military spouses need not even step a foot in the spouse's home state to claim it for tax purposes. This was because the rule clarified the distinction between residence and domicile. While claiming a state initially demanded residency, the new law says domicile status would suffice, meaning all you need is to apply for a driver’s license, vehicle registration, file taxes, and vote in that state to claim as the home state.


This may lead to military spouses arbitrarily picking tax-friendly states as home states. The rules strictly prohibit this. You or your spouse need to have a real connection, that is, a domicile, with any state before claiming it as your home state.

 

The rules also do not exempt you from filing taxes even if stationed with your military spouse overseas. You still have to pay income taxes to your home state as long as you're earning a paycheck.


Although your state of domicile would tax your income, your income or property cannot be taxed there in the new state of duty.

Passed in 2009, the MSRRA (Military Spouses Residency Relief Act) solved the problem of multiple taxations that military spouses had to endure whenever they frequently moved with their partners.


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Pat Raskob
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