The Military Spouse Residency Relief Act (MSRRA), which took effect when President Obama signed the bill last November, could have impact on federal and state income taxes for military spouses. Under the provision, military spouses can neither lose nor acquire a residence for tax purposes simply by moving in or out of a jurisdiction while accompanying a service member who changes residency because of military orders. The change means that spouses can declare their military husband’s or wife’s state of residency as their own, for tax purposes, as long as they share the same residence. The National Military Family Association says that some spouses may need to alter their income tax filings accordingly this year. “If you worked in a state with income taxes and were able to align your residency with your service member’s state of legal residence, you may be eligible for a refund in the state where you are currently working,” NMFA says. “Spouses should not assume their tax status will be the same as the service member’s in the state of residency. Many states exempt military income earned while the service member is on orders out of the state. This exemption will not apply to income earned by a spouse unless the state specifically excludes it.” NMFA advises its members to consult the Federation of Tax Administrators, online at www.taxadmin.org. Service members can also seek free tax-preparation assistance through base legal assistance offices. NMFA also offers some online tips at familes@militaryfamily.org.
