From The Mailbag: Active Duty Taxes

Active Duty Taxes

There are so many things to learn when you enter the military, and it seems like a lot of stuff doesn’t get covered in the individual branches’ basic military training.  Even things that are covered can be forgotten with all the information that comes in such a short time.  Throw in some family members or spouses who didn’t get the benefit of any training and there is always confusion.  Today’s letter is a great example:

Dear Kate,

I want to help my daughter with her taxes. She joined the military in the same state as her legal residence, which is Washington state. During 2015 she was stationed in three different states (South Carolina, North Carolina, and California) along with having income in Washington state before she joined the military. I’m clueless how to handle her taxes with her being in so many different states, or maybe it’s just not that complicated. Any advice would be greatly appreciated!

Sarah’s Mom

I’m always thankful when a question is easy!

Sarah’s Mom,

The Servicemembers Civil Relief Act (SCRA) permits military members to maintain their state of legal residence (domicile) even when living elsewhere. Therefore, assuming your daughter maintains Washington State as her state of legal residence, she files her state income taxes with Washington State.

It is important that her military withholding reflects her Washington State residency, and that she makes every effort to maintain clear intent to keep Washington State as her state of legal residence. This is typically demonstrated by holding a driver’s license there, registering vehicles there, being registered to vote (and actually voting, through absentee ballots), etc.

You will be doing your daughter a great service if you let her do her own taxes, providing guidance as necessary. If she is a new service member, her taxes should be quite simple.

Good luck to you both,

Kate

 

I think it is great when parents want to help their kids learn a new skill, and preparing a tax return is a skill that can benefit from a little supervision.

Not all tax questions are this simple. When your situation gets more complicated, be sure to ask your installation’s legal services office or volunteer income tax assistance office for more specific guidance.

About the Author

Kate Horrell
Kate Horrell is a military financial coach, mom of four teens, and Navy spouse. She has a background in taxes and mortgage banking, and a trove of experience helping other military families with their money. Follow her on twitter @realKateHorrell.