According to OTR Notice 2009-13, "Effective for tax years 2009 and after, the Military Spouse's Residency Relief Act provides that a state or local tax jurisdiction cannot include the military compensation earned by nonresident service members to compute the income tax liability imposed on the non-military income earned by the service member. Any compensation earned by the spouse of the service member, while accompanying the service member to a duty station, outside of their legal residence for taxes, pursuant to the service member’s military orders, would not be subject to income tax in the jurisdiction outside of their legal residence for tax purposes."
To claim tax-exempt from Washington DC (District of Columbia) withholding:
A spouse of a service member whose wages are exempt from District of Columbia income tax under the new law may file a D-4 with their employer to claim exemption from withholding.
To claim a refund of taxes withheld from your Washington DC income:
- State Section
- Nonresident District of Columbia return
- Basic Information
- Enter the state abbreviation for your domiciliary or legal state of residency
- Military spouse exemption: If your non-resident military spouse was in the armed services during 2022, and you are not a DC resident, enter the state of domicile declared on DD Form 2058
- Select the state from the drop-down menu
- Save to continue with your return.
Military Spouse income may be taxable on your state return where you file as a resident.