Active duty service members have always been able to keep one state as their state of legal residency (usually their Home of Record) for tax purposes even when they move frequently on military orders. A state of legal residence (SLR) is also considered their “domicile” or “resident” state.
This was not so for the nonmilitary spouse until the Military Spouse Residency Relief Act (MSRRA) was signed in 2009. Since then, a nonmilitary spouse of a service member may be able to keep the same resident state of the military spouse regardless of which state they live in.
The Veterans Benefits and Transition Act of 2018 allows military spouses to elect to file a state resident return using the military members state of legal residence. Before the Veterans Benefits and Transition Act, spouses could only claim the same state of residence if they and their service member were from the same state.
The benefit of this act is that military spouses will no longer need to file a separate resident return for their resident state. Instead, they can file jointly with their spouse on the military member's state resident return.
How a nonmilitary spouse claims a resident state:
A nonmilitary spouse can choose the service member’s state or their original state of residency.
The spouse is no longer required to have lived in the service member's state to claim that state as their resident state which it was under MSRRA qualifications. The spouse must also be able to prove residency by being registered to vote, maintaining a driver’s license, and any other residency requirements of that state.
What makes me qualified?
When the military family no longer lives in that resident state, to qualify under the MSRRA or Benefits Transition Act., the following conditions must be met:
- The service member is stationed, in compliance with military orders, in a state that is not his resident state,
- The nonmilitary spouse is in that state solely to live with the service member, and
- Both the service member and spouse have the same resident state.
When the nonmilitary spouse meets the above qualifications, their wages from services performed in that new state will only be taxed in their resident state, not by the state they are currently living in.
IMPORTANT: when living in a non-resident state, the spouse needs to check the state laws to determine if they need to declare their non-residency for withholding purposes. This may be required by their employer on an annual basis.
What can make me disqualified?
- The service member leaves the service
- The couple divorces
- The service member moves to a new location where the spouse could join him/her, but chooses not to. If deployment is to a location where the spouse is not allowed to follow, it does not affect their MSRRA eligibility.
- The spouse clearly establishes the new state as a state of residence. This includes an action like applying to vote in that state.
For information on Military filing for your state, please click here.