According to the Virginia Tax Bulletin10-1, "On November 11, 2009, President Obama signed into law the Military Spouses Residency Relief Act (hereinafter, the "Act") (S. 475). The Act amends the Servicemember Civil Relief Act (hereinafter, "SCRA") to provide that a spouse shall neither lose nor acquire domicile or residence in a state when the spouse is present in the state solely to be with the service member in compliance with the service member’s military orders if the residence or domicile is the same for both the service member and spouse."
In December of 2018 Congress enacted federal legislation which amends the Servicemembers Civil Relief Act, which allows for the servicemembers spouse to choose the same residency for state tax purposes as the servicemember. According to the Virginia Tax Bulletin 19-2, "The Veterans Benefits and Transition Act allows qualifying spouses to elect the same residency as the servicemember for state tax purposes, even if the spouse has a different residency or domicile from that of the servicemember. This election can be made annually beginning with taxable year 2018 for any taxable year of the marriage, regardless of the date on which the marriage of the spouse and the servicemember occurred. This election does not affect taxes imposed or paid for 2017 and earlier."
To claim tax-exempt from Virginia withholdings
If you qualify, you can stop your withholding by submitting a revised Form VA-4 to your employer. If you are claiming exemption under the Military Spouses Residency Relief Act, check the box on Line 4 and attach a copy of your spouse's military ID card to the Form VA-4. This form must be filed annually with your employer.
To claim a refund of taxes withheld from your Virginia income, follow these steps in the program:
- State Section
- Nonresident Virginia Return
- Income Subject to Tax
- Wages for Spouses of Military Personnel: Under the Service member Civil Relief Act -Enter the wages as a positive number.
If you are filing to claim a refund of your state withholdings, the state requires you to paper file the return along with Form 763-S Virginia Special Nonresident Claim For Individual Income Tax Withheld.
- Copies of your W-2 Forms to document the Virginia income tax withheld,
- If your state of legal residence imposes an income tax, you must also attach a complete copy of the return you filed with that state,
- A copy of your military spouse ID card,
- Proof of your spouse's state of legal residence, such as a copy of a Leave and Earnings Statement (LES), current driver's license from the state of residence, or DD Form 2058 (State of Legal Residence Certificate).
Your refund cannot be issued unless all required items are attached to the 763-S Form.
Military Spouse income may be taxable on your state return where you file as a resident.