The Military Spouse Residency Relief Act (MSRRA) provides protection to military spouses related to residency, voting, and taxes. The MSRRA amends the Servicemember Civil Relief Act (SCRA) to include the same privileges to a military servicemember’s spouse.
Updates to the MSRRA clarify confusion between domicile and resident statuses for military spouses. Now, military spouses may claim the same domicile as the servicemember without having lived there at all.
It should be noted that domicile status requires an individual does not necessarily mean where you live, but setting up permanent status which includes applying for a driver’s license or vehicle registration, filing taxes, or voting. The MSRRA does not allow a spouse to pick or chose a domicile in just any State. Domicile is established, not arbitrarily chosen. The spouse must have actually been present in the State, established it as his or her domicile, and maintained it by forming and maintaining the necessary contacts, such as registering to vote, owning property, registering vehicles, holding professional licenses, declaring a homestead, or indicating a State of probate in a last will and testament.
Remember to always consult with a tax professional or attorney if you are uncertain about state guidelines regarding MSRRA eligibility.
MSRRA Eligibility Factors
- Is legally married to the spouse, AND
- The servicemember is in the state on military orders, AND
- Currently resides in a state different than the state of his or her domicile, AND
- Resides in the state solely in order to live with the servicemember, AND
- The servicemember is present in the state in compliance with military orders. A military spouse does not lose his or her status if a servicemember is deployed to a war zone or other location where the military spouse is not allowed to follow. The military treats this as a “travel” or “TDY” situation.
Some States Require Another Factor:
- The military spouse and the servicemember both are able to claim the same domicile.
Benefits to the Military Spouse Act Include:
- Military spouse income earned in a servicemember’s state under military orders cannot be taxed unless the spouse establishes residency in that state. Note: This does not mean the spouse’s state of legal residence cannot tax on income earned.
- The act provides flexibility for military spouses to choose between their spouse’s resident state or claim residency with each PCS.
- The military spouse and service member may be able to keep the same SLR so long as they have not established domicile elsewhere. Form DD 2058 (State of Legal Residence Certificate) may need to be filled out according to state requirements.
- Military spouses no longer have to file multiple part-year and nonresident income tax returns when they earn wages.
- Voting – A military spouse may vote within their spouse’s legal state of residence.
- Personal Property Tax Exemption – Personal property taxes such as vehicle registration fee imposed by states and local jurisdictions are exempt if the military spouse’s legal residence is not in the state where he or she is based due to military orders. Typically an exemption with that state must be filed to qualify.
Limitations to the Military Spouse Residency Relief Act:
- Military spouses may need to declare non-residency or file a non-resident return if they paid a different states taxes in the previous year.
- The spouse does not inherit the domicile of the servicemember upon marriage
- The spouse must be able to show that she/he had the domicile before moving into a different state, and the spouse must be able to prove that the domicile existed by going through the new state’s existing list of facts and circumstances, or “proofs of intention.”
- The military spouse must maintain their domicile.
- A spouse who has never lived in State X cannot simply tell the employer that they are now a domiciliary in State and become exempt from withholding.
- State laws will vary on what circumstances validate having established a domicile in another state, and what proof is sufficient.
- A state may exempt military income earned while the service member is on orders out-of-state, but MSRRA does not automatically extend this exemption to a military spouse.
- Does not allow military spouses to retain their driver’s license in their state of legal residence and is silent about vehicle registrations, inspections or insurance.
Veterans Benefits and Transition Act of 2018
The Veterans Benefits and Transition Act creates the possibility of tax savings by allowing spouses to choose the same state of residence as their servicemember for tax filing and voting purposes, regardless of whether they have ever lived in the state. Prior to this law, spouses could only claim the same state of residence if they and their service member were from the same state.
The Military Spouse Residency Relief Act (MSRRA) can be confusing, and fortunately for military spouses, legal assistance and free tax help are available. Contact your local legal assistance center for additional support.
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