By Capt. Timothy Bowman
As tax season begins, it is important for taxpayers to know that their state of residence can significantly impact their tax burden.
For example, some states such as Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming, do not have income tax while other states will tax your income, including military pay. Therefore, a taxpayer’s state of residency can impact their taxes by hundreds or even thousands of dollars.
With this in mind, service members and their spouses should be aware of a recent amendment to the Service Members’ Civil Relief Act. On Dec. 31, the Veterans Benefits and Transitions Act of 2018, was signed into law.
The VBTA now allows spouses to simply choose to have the same residence as the service member for state and local tax purposes as well as for voting. Under the new law, a spouse is not even required to establish physical presence in a state or have an intent to remain in that state in order to claim it for tax purposes. Instead a spouse can now unilaterally elect to be the resident of the same state as their service member spouse for tax purposes — regardless of whether the spouse has ever lived in that state.
Because the VBTA was signed on the last day of the 2018 taxable year, spouses can elect the same residence as their service member spouse for taxable year 2018 — filed in the 2019 income tax filing season. This means that spouses who choose to claim their service member’s state could potentially get a refund from the state they paid taxes to during 2018. Also, if the service member’s state of legal residency has no income tax, or a lower tax rate, the spouse can enjoy the tax benefits of claiming the service member’s state this year.
For questions about the SCRA or your state of residency for tax or voting purposes, please consult with a legal assistance attorney at the Office of the Staff Judge Advocate, Building 315, 316 Missouri Avenue, on Fort Leonard Wood.
To schedule an appointment to get your taxes prepared and filed free of charge, call the Fort Leonard Wood Tax Center at 573.596.1040.
(Editor’s note: Bowman is the Fort Leonard Wood Tax Center officer in charge.)