From The Mailbag: Military Spouse Residency Relief Act

September 22, 2012 | Kate Horrell

Letters, we get letters,  we get lots and lots and lots and lots of letters.  And some of them are pretty darn helpful.

Today’s letter is about the Military Spouse Residency Relief Act (MSRRA) passed in    .  We’ve got an entire category devoted to the MSRRA.  If the link doesn’t work, you can look down a bit on the left hand side of this page.  MSRRA is listed in with the other categories.  It is complicated and frustrating, but it was a law written with good intentions and it is a huge boon to the spouses who are able to use the provisions that are listed in the act.

The original letter asks:

Under “The Act”, do military spouses residing in a state other than their home of records have to claim their HOR state for State payroll tax purposes, or do they have the option of choosing to pay state payroll taxes in the state that they reside in? (i. e. Virginia is HOR, but stationed in NC)

This is a really common question.  Here’s my reply:

You can choose to pay taxes in the state that you reside, but it has the potential to get a little sticky.  There is no provision in the MSRRA for regaining domicile in your AD spouse’s HOR state once you’ve given it up to claim domicile in another state.

Since there are so many aspects to domicile, you could try to keep your DL and voting in Virginia and pay taxes in NC.  There is so much grey area in the MSRRA that I don’t think it would be illegal, but I’m not a lawyer.  I would hate for you to have to keep changing states every time you moved (especially if you go to California) just because you did it this one time.

You might check with legal services to see if they have additional thoughts on this subject.

Good luck – it is a tricky issue.

As I said in the response:  I’m not a lawyer.  I’m just a military spouse who enjoys reading about geeky stuff like taxes and laws and benefits. I strongly encourage every one of you to read and try to understand the Military Spouse Residence Relief Act.  It can be an important benefit if you are able to use the act to avoid paying state taxes in a state just because your spouse is stationed there.

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