Getting ready to file your taxes? If you are a military member or military spouse, your taxes can be more complicated than the average return. Stationed in one state, resident of another, with a spouse who is a resident of a third state can be altogether mindboggling when it comes to crunching the numbers. It’s enough to make even seasoned tax professionals take a deep breath before tackling the complicated return. Military spouse residency has long been an issue that these nomadic individuals face as part of their support of their servicemember spouse.
The Veterans Benefits and Transition Act of 2018 is providing some clarity and relief to military families faced with multiple-state returns. The law, which was signed and became law on December 31, 2018, addresses the residency requirements for military spouses as it relates to taxes and voting.
“For any taxable year of marriage, the spouse of a servicemember may elect to use the same residence for purposes of taxation as the servicemember regardless of the date on which the marriage of the spouse and the servicemember occurred,” reads the law.
In an article published in Military Times, Army Lt. Col. David Dulaney, the executive director of the Armed Forces Tax Council, said that the change is “quite an expansion of rights for military spouses.” As a Texas resident, his wife was required to pay Georgia state taxes when they were stationed at Fort Benning, Georgia and later Virginia taxes when the military took them to that state. Through their moves, he was able to maintain residency in Texas, a state that did not require state taxes.
Military spouses can now claim residency in the state that their servicemember spouse claims, even if they have never lived there. Under previous guidance under the Servicemembers Civil Relief Act, military members do not need to change their residency when they are stationed in a new state. They are able to vote and pay taxes to their “home state” rather than the state in which they currently live due to their military service. This decreases the burden that moving with the military places on them, as well as brings some tax advantages if they are a resident of a state that does not require state income taxes.
The Military Spouse Residency Relief Act, passed in 2009, allowed a servicemember’s spouse to claim the same residency as their husband or wife but only if they lived in that state for a period of time. Military OneSource, a resource provided by the DoD, will answer questions about the new law on February 14.
Mark your calendar! On Feb. 14, we’re going live to discuss all things military taxes. From Military Spouse State Tax Residency to changes in tax laws, we’ve got you covered. Save the date: https://t.co/hRSmGRhfro. pic.twitter.com/6djU7OzoxZ
— Military OneSource (@Military1Source) February 8, 2019
Application of the New Law
The law will retroactively apply to the 2018 tax year and will take effect for voting requirements in March of 2019. This may help military spouses participate in in-person voting or make their absentee voting experience easier.
With a myriad of tax changes this season, all servicemembers and spouses should consult with their tax professional to make sure that they are compliant with federal and state requirements that apply to their individual situation. The Volunteer Income Tax Assistance (VITA) program provides free tax preparation services to military members and their families on many bases and installations.
But this is a key step to providing relief to military families (and potentially giving them additional tax savings). It will be up to each military spouse to decide if changing residency is the right choice for them but it does provide additional options to help ease the burdens that come with frequent relocations encountered by military families.
