How Do Military Spouses File Taxes?

A service member’s state of residence plays a big role in the way military families pay their state and federal taxes.

First things first: let’s define the terms Home of Record and State of Legal Residence:

1. A home of record - or HOR for short - is the place from which you originally enlist in the military. An HOR does not change unless you leave the military and reenlist from another state and does not affect voting rights, paying taxes, or registering vehicles.
2. A military state of residence - or the state of legal residence (SLR) - is the place where the service member intends to live after completing military service. For tax purposes, an elected SLR is considered to be the service member’s resident state while they are on active duty even when they move frequently on military orders.

Let’s say that you are originally from Maine. You have moved to Florida to attend college and then joined the military from the same state. You are then assigned to a military base in Texas for the next 10 years, but intend to go back to Maine after leaving the military.

In this example, Florida is your HOR and Maine is your legal SLR even if you never visit the state during service.

Expressing intent to live in another state does not automatically make it your new SLR.

For civilians, legal residence is defined by an individual’s job, where they are registered to vote and where they pay state taxes. Civilians have to provide proof of their intent to move to a different state. The intent may be proven by one of the following actions:

Registering to vote in the new state;

• Registering your car in the new state and changing the license plates;

• Filing federal and state taxes in the new state;

• Buying real estate or a home in the new state;

• Having your mail forwarded to your new state.

Service members wishing to change their SLR and elect a new one must complete and submit a DD Form 2058 (State of Legal Residence Certificate). After the form is reviewed and accepted by a finance officer, the service member will pay their taxes according to the laws of the state they have selected.

The 2009-approved Military Spouse Residency Relief Act (MSRRA) allows civilian spouses of service members to claim the SLR of the military spouse as their own regardless of which state they have temporarily relocated to as a family. This means that spouses of military service members can file state income taxes according to the SLR of their military spouse.

As per MSRRA rules, the spouse must have lived in that service member’s resident state before claiming it as their own SLR. The spouse must also be able to prove residency by registering a driver’s license, being registered to vote, and fulfilling any other residency requirements of that state.

Spouses must meet ALL of the following criteria to be eligible for MSRRA:

1. The civilian spouse must be legally married to the service member.
2. The servicemember must be in the state different than the state of their domicile on military orders.
3. The civilian spouse must reside in the state solely in order to live with the servicemember.

The spouse is legally allowed to keep their status if the service member is deployed to a location where the spouse is not allowed to follow.

Each state has its own rules on whether or not a service member must file a tax return when stationed outside of their SLR. Check out the information provided by the tax department of your resident state to find out if you need to file a state tax return if your military spouse is stationed outside of the state.

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Ingvaar is writing about the difficulties in military, legal and taxation paperwork. Explaining how to make life easier =)