New law provides military spouses assistance with tax, state residency issues

  • Published
  • By 23rd Wing
  • Legal Office
MOODY AIR FORCE BASE, Ga. --  A new law was recently passed in an effort to relieve some of the complications and hardships military spouses endure after a permanent change of station move.

Before the Military Spouses Residency Relief Act was signed into law, spouses were required to re-establish residency in the new state after a PCS move and cut legal ties with their previous state. The new act will assist in changing this procedure for some spouses.

The two important terms to understand in the MSRRA are "domicile" and "residency."

Domicile is defined as the place at which a person has been physically present and that the person regards as home; a person's true, fixed, principal and permanent home, to which that person intents to return and remain even though currently residing elsewhere. This intent is proven through a number of small acts taken as a whole to prove connections with a state.

Residency is simply the place where you currently live and the state of your home address.

Confusion arises because these terms are used interchangeably. A person may say, "I am stationed at Moody but a resident of Texas." Legally, Texas is their domicile and they reside in Georgia.

Most servicemembers move out of their domicile state and reside in a new state when making a PCS move to another base.

Under the Servicemembers Civil Relief Act, servicemembers are not required to lose or change their domicile due to this military move; however, they may do so if it is to their advantage, such as a more favorable tax status. This benefit is now being extended to military spouses through the MSRRA if certain requirements are met.

Prior to the MSRRA, the only option available for spouses was to change their domicile to the new state they were moving to. The effect of the MSRRA is to provide spouses with a second option for their domicile.

In order to be eligible for this new option, the spouse must meet the following criteria. Individuals must live in a state different than their state of domicile, move to a state solely to live with the spouse and the servicemember they married is present in the state in compliance with military orders.

If these three requirements are met, the military spouse may keep their previous domicile as long as they meet the legal requirements for maintaining it.

The key to choosing this option is maintaining the domicile from the previous state. Evidence of domicile includes the state of voter registration and actually voting in elections, vehicle registration, real property ownership, claiming the homestead exemption, history of income tax payment and the exercise of other state benefits such as in-state college tuition rates.

Although information has been provided regarding the new law, there are still misconceptions on what the MSRRA means.

Many have misinterpreted this law as allowing spouses to simply pick and choose any domicile they want without having proof to show they are connected to that state. In addition, some mistakenly believe they can inherit the domicile of the servicemember upon marriage. Finally, others incorrectly use the MSRRA to "re-adopt" a domicile they once had, but have since lost legal connection with.

Spouses must meet the MSRRA requirements with information based on actual evidence that can be provided to support their domicile.

For most spouses, the MSRRA will be a tax-planning tool for 2010 and later filing seasons, but they are not authorized for the 2009 season. Because of these limitations, many spouses will be unable to immediately take advantage of the MSRRA's benefits.

However, should a spouse wish to maintain the domicile they currently have, they will want to ensure they are establishing as many contacts with the state as possible before their next PCS move.

For the spouses who currently have a domicile different than their residence, they may be able to take advantage of the tax benefits of that state such as lower or no income tax.

If you believe you are one of the spouses who currently maintain numerous legal ties to a state other than Georgia, you may contact the base Legal Office to receive a Residency Worksheet before filing taxes. This worksheet should be reviewed during a legal assistance appointment prior to a tax appointment to determine the proper state of domicile.

Disclaimer: Individual state governments are the final authority in determining an individual's legal residency. Legal assistance attorneys can assist individuals by explaining the law requirements but cannot guarantee your proper domicile.