Special Personal Income Tax Rules for Nonresident Military Personnel
Amendments to Federal Soldiers and Sailors Act Affect New Mexico Tax Changes to the Soldiers and Sailors Act enacted by Congress in late December 2003 require corresponding changes in the way nonresident military personnel serving in New Mexico report their military pay on the New Mexico Personal Income Tax (PIT) return for 2003. Certain nonresident military personnel could reduce their New Mexico personal income tax liability by following the instructions in this bulletin.
The changes in the Congressional bill, signed into law after New Mexico’s income tax forms were finalized, affect you if: you are serving with the United States Armed Forces in New Mexico; you maintain your permanent residence (domicile) in another state, AND you must file a New Mexico personal income tax return because you or your spouse have other income from New Mexico sources. Qualifying military personnel should follow the special instructions below when completing the 2003 PIT-1 general return and applicable schedules.
Completing the PIT-1 General Form:
Everyone who files individually in New Mexico completes the PIT-1 general form using the same filing status for state and federal purposes. If you or your spouse are affected, you must also file Schedule PIT-ADJ. Report all non-military wage income from employment in New Mexico and any other New Mexico source income on Schedule PIT-B. In all cases, complete lines 5 through 8 according to the instructions for PIT-1.
Completing the PIT-ADJ:
• Using the revised PIT-ADJ schedule for 2003 (see page 3 of this bulletin), on line 11a enter only the military wages or salary that was included in the federal adjusted gross income (AGI) amount you reported on line 5 of Form PIT-1.
• If you changed residency or domicile to or from New Mexico during the tax year, enter only the military wages you earned while you were a nonresident of New Mexico.
• On the New Mexico PIT-ADJ, when you calculate the exemptions/deductions total from federal adjusted gross income (AGI), add the nonresident military wages to the sum of lines 1 through 11 and enter the result on line 12. Enter the same amount on line 9 of the Form PIT-1. See the sample PIT-ADJ schedule attached.
Completing the PIT-B allocation and apportionment schedule:
File the PIT-B allocation and apportionment schedule if you are a nonresident member of the United States Armed Forces and you have income both from New Mexico sources and sources outside New Mexico. Nonmilitary income includes – but is not limited to – income from you or your spouse’s civilian employment in New Mexico. Follow the PIT-B instructions below carefully:
• Exclude your nonresident military income from line 1, columns 1 and 2. This is the same amount you deducted from your New Mexico taxable income on the PIT-ADJ (see above).
• Continue according to instructions until you reach line 12.
• For line 12, columns 1 and 2, subtract line 11 from line 10 as the instructions provide. Caution: because you have already excluded nonresident military pay from line 1, the amount in column 1 may be less than your federal adjusted gross income (AGI). The amount on line 12, column 1, must be equal to or greater than the AGI without the nonresident military pay you excluded on line 1. If not, there is an error. Please go back through the PITB schedule and recalculate. See the attached sample PIT-B allocation and apportionment schedule.
• Complete the rest of your 2003 New Mexico personal income tax return according to instructions.
For information about military extensions, please check Taxation and Revenue Department publication FYI-311, Military Extensions for New Mexico Personal Income Tax Filers. It also contains information on hardship and installment payment provisions. New Mexico complies with the Soldiers and Sailors Relief Act in hardship cases. You can locate FYI-311 on the TRD web site at www.state.nm.us/tax. Click on “publications.” Scroll down to the personal income tax listings.